Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing of Proposed Rule Change Relating to Confidential Information, Market Disruption Events, and Other Changes, 36799-36807 [2021-14796]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 86, Number 131 (Tuesday, July 13, 2021)]
[Notices]
[Pages 36799-36807]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-14796]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92341; File No. SR-FICC-2021-004]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing of Proposed Rule Change Relating to Confidential 
Information, Market Disruption Events, and Other Changes

July 7, 2021.
    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 June 25, 2021, 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. 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.
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The proposed rule change consists of modifications to FICC's 
Government Securities Division (``GSD'') Rulebook (the ``GSD Rules''), 
Mortgage-Backed Securities Division (``MBSD'') Clearing Rules (the 
``MBSD Clearing Rules'') and

[[Page 36800]]

MBSD EPN Rules (the ``EPN Rules,'' and collectively with the GSD Rules 
and the MBSD Clearing Rules, the ``Rules'') \3\ to (i) revise certain 
provisions in the Rules relating to the confidentiality of information 
furnished by applicants, Members and EPN Users (collectively, 
``participants'') to FICC, (ii) require that each participant maintain 
confidential information furnished by FICC or its affiliates in 
confidence and restrict use and disclosure of such information, (iii) 
add certain officers who are allowed to determine that there is a 
Market Disruption Event pursuant to GSD Rule 50 and MBSD Rule 40 and 
(iv) add a new GSD Rule 50A and MBSD Rule 40A to address situations in 
which it is necessary to disconnect a Member, EPN User, third party 
service provider, or service bureau due to an imminent threat of harm 
to FICC, Members, EPN Users and/or other market participants. Each of 
the proposed changes is described in greater detail below.
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    \3\ Capitalized terms not defined herein are defined in the GSD 
Rules, MBSD Clearing Rules or the EPN Rules, as applicable, 
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
    The proposed rule change consists of modifications to (i) revise 
certain provisions in the Rules relating to the confidentiality of 
information furnished by participants to FICC, (ii) require that each 
participant maintain confidential information furnished by FICC or its 
affiliates in confidence and restrict use and disclosure of such 
information, (iii) add certain officers who are allowed to determine 
that there is a Market Disruption Event pursuant to GSD Rule 50 and 
MBSD Rule 40 and (iv) add a new GSD Rule 50A and MBSD Rule 40A to 
address situations in which it is necessary to disconnect a Member, EPN 
User, third party service provider, or service bureau due to an 
imminent threat of harm to FICC, Members, EPN Users and/or other market 
participants. Each of the proposed changes is described in greater 
detail below.
(i) FICC Confidentiality Requirements
    Section 5 of GSD Rule 2A,\4\ Section 4 of GSD Rule 3,\5\ Section 10 
of GSD Rule 3,\6\ Section 2(j) of GSD Rule 3A,\7\ Section 3(e) of GSD 
Rule 3B,\8\ Section 5(k) of GSD Rule 3B,\9\ Section 6 of MBSD Rule 
2A,\10\ Section 3 of MBSD Rule 3,\11\ Section 9 of MBSD Rule 3 \12\ and 
Section 9 of EPN Rule 1 of Article III of the EPN Rules \13\ each 
contain provisions relating to confidentiality of information furnished 
by participants to FICC (collectively, the ``FICC Confidentiality 
Requirements''). Each of the FICC Confidentiality Requirements provides 
that either (a) such furnished information will be held by FICC in the 
same degree of confidence as may be required by law or the rules and 
regulations of the appropriate regulatory body having jurisdiction over 
the participant or (b) the rights of FICC to inspect books and records 
or receive information is subject to any applicable laws or rules or 
regulations of regulatory bodies having jurisdiction over the 
participant that relate to confidentiality of records. FICC is 
proposing to update the FICC Confidentiality Requirements because such 
provisions (i) may result in unequal treatment of participants due to 
differing laws or regulations of regulatory bodies, (ii) may result in 
a potential conflict of laws where rules or regulations governing a 
regulatory body of a participant differ from the laws applicable to 
FICC, or a participant has multiple regulatory bodies whose rules 
conflict, (iii) are burdensome as they require FICC to track the rules 
and regulations of each regulatory body of its participants, and ensure 
that information provided by participants to FICC is held in confidence 
to the same degree as it is held by such regulatory bodies, or to 
determine what applicable laws or rules or regulations of regulatory 
bodies that relate to confidentiality of records affect FICC's rights 
to receive information and (iv) are unnecessary as FICC has sufficient 
protections in place relating to protection and confidentiality of 
participant data.
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    \4\ Section 5 of GSD Rule 2A, supra note 3. GSD Rule 2A relates 
to initial membership requirements including information that FICC 
may require applicants to furnish to become Members of FICC.
    \5\ Section 4 of GSD Rule 3, supra note 3. GSD Rule 3 relates to 
ongoing membership requirements including information that FICC may 
require Members to furnish to FICC to continue membership at FICC.
    \6\ Section 10 of GSD Rule 3, supra note 3. Section 10 of GSD 
Rule 3 states that the books and records of Members, and in the case 
of a Registered Investment Company Netting Member, their Controlling 
Management, shall be open to inspection and that FICC shall be 
furnished certain information.
    \7\ Section 2(j) of GSD Rule 3A, supra note 3. GSD Rule 3A 
relates to the rights, liabilities and obligations of Sponsoring 
Members and Sponsored Members including information that FICC may 
require Sponsoring Members, Sponsored Members and applicants to 
become Sponsoring Members or Sponsored Members, to furnish to FICC.
    \8\ Section 3(e) of GSD Rule 3B, supra note 3. GSD Rule 3B 
relates to the rights, liabilities and obligations of CCIT Members 
including information that FICC may require CCIT Members and 
applicants to become CCIT Members to furnish to FICC.
    \9\ Section 5(k) of GSD Rule 3B, supra note 3. Section 5(k) of 
GSD Rule 3B states that the books and records of CCIT Members, and 
their Controlling Management, shall be open to inspection and that 
FICC shall be furnished certain information.
    \10\ Section 6 of MBSD Rule 2A, supra note 3. MBSD Rule 2A 
relates to initial membership requirements including information 
that FICC may require applicants to furnish to become Clearing 
Members of FICC.
    \11\ Section 3 of MBSD Rule 3, supra note 3. MBSD Rule 3 relates 
to ongoing membership requirements including information that FICC 
may require Members to furnish to FICC to continue membership in 
FICC.
    \12\ Section 9 of MBSD Rule 3, supra note 3. Section 9 of MBSD 
Rule 3 states that the books and records of Members shall be open to 
inspection and that FICC shall be furnished certain information.
    \13\ Section 9 of EPN Rule 1 of Article III of the EPN Rules, 
supra note 3. Rule 1 of Article III of the EPN Rules relates to 
initial and ongoing requirements to become and continue to be an EPN 
User including information that FICC may require applicants or EPN 
Users to provide to FICC.
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    The regulatory bodies that have jurisdiction over participants 
differ by participant depending on certain criteria of each 
participant, including the type of entity of the participant, where the 
participant was organized, the types of businesses in which the 
participant engages and where the participant is doing business. In 
addition, many participants are regulated by more than one regulatory 
body. As a result, a requirement to maintain confidentiality standards 
for information provided by a participant or the right to receive 
information based on the regulatory body or bodies that regulate such 
participant result in varying standards of confidentiality for 
participants that are regulated by different regulatory bodies. Such 
varying standards may result in unequal treatment of participants due 
to differing laws or regulations of the regulatory body or bodies 
governing such participants. In addition, such varying standards may 
result in a potential conflict of laws where rules or regulations 
governing a regulatory body of a participant differ from the laws 
applicable to FICC or an entity that has multiple regulatory bodies 
whose rules conflict.
    FICC believes that it is unnecessarily burdensome to determine the 
rules and regulations of each of the regulatory bodies that regulate 
its participants.

[[Page 36801]]

Such regulatory bodies include numerous U.S. federal and state 
regulators as well as foreign national, state and local regulators. 
FICC proposes revising the language in the FICC Confidentiality 
Requirements to maintain one confidentiality standard for all 
participants rather than maintaining potentially different 
confidentiality standards for participants based on the various, 
unrelated regulatory bodies regulating such participants. FICC is 
proposing to replace the existing language in the FICC Confidentiality 
Requirements with language that would provide that FICC will hold non-
public information furnished pursuant to those Rules in confidence as 
may be required under the law or the rules and regulations applicable 
to FICC that relate to the confidentiality of records. Such laws, rules 
and regulations would include national, state and foreign laws 
governing confidentiality of data that are applicable to FICC in 
connection with its collection and disclosure of data.
    FICC believes that the rules and regulations applicable to FICC 
governing the use and disclosure of confidential information provide 
standards that are representative of those of the various regulatory 
bodies governing its participants. As a result, FICC does not believe 
that the proposed rule change relating to the FICC Confidentiality 
Requirements would result in any change to FICC's practices relating to 
data protection and confidentiality of information provided by 
participants.
(ii) Participant Confidentiality Requirements
    Historically, FICC has generally not provided, nor been requested 
to provide, information that contains confidential or proprietary 
information of FICC or its affiliates to its participants except for 
information necessary for participants and their service providers and 
service bureaus to connect to FICC and to participate in the services 
that FICC offers to its participants. While certain information is 
protected by intellectual property rights of FICC and its affiliates 
under applicable intellectual property laws, such as copyright laws and 
trademark laws, the Rules do not include any express obligations for 
participants to protect confidential information received by them from 
FICC or its affiliates.
    In connection with the development of cyber and information 
security programs pursuant to applicable regulatory requirements by 
participants, FICC and its parent company, The Depository Trust & 
Clearing Corporation (``DTCC''), have received an increasing number of 
requests from participants for confidential and proprietary information 
of FICC and DTCC.\14\ This includes, for example, information regarding 
DTCC's network operations and data security practices, legal 
settlements, and other information. Additionally, in the event there is 
a cyber incident relating to a participant, FICC or DTCC may be 
requested to disclose confidential information regarding its cyber 
threat indicators, sources of cyber threat information, or other 
information and actions taken related to a cyber event.
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    \14\ DTCC provides a set of core business processes for FICC and 
DTCC's other subsidiaries, including the technology systems and 
networks that provide connectivity between FICC and its participants 
and that provide the ability of FICC to provide the services as 
required under its Rules. Most corporate functions are established 
and managed on an enterprise-wide basis pursuant to intercompany 
agreements under which it is generally DTCC that provides relevant 
services to FICC and DTCC's other subsidiaries.
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    In order to provide for contractual protections for such 
confidential information of DTCC, FICC and DTCC's other subsidiaries, 
FICC is proposing to add provisions to the Rules that would require 
participants to maintain confidential information of FICC and its 
affiliates that FICC provides to such participants in confidence and 
not to disclose such confidential information except as necessary to 
perform such participant's obligations under FICC's Rules or as 
otherwise required by applicable law (``Participant Confidentiality 
Requirements''). The Participant Confidentiality Requirements would 
provide that in the event of a breach of the Participant 
Confidentiality Requirements, FICC or DTCC would be entitled to seek 
any temporary or permanent injunctive or other equitable relief in 
addition to any monetary damages under the Rules. In addition, as with 
any failure to comply with its Rules, FICC would have the ability to 
impose other disciplinary proceedings or restrictions on access to 
services as provided in the Rules for failure to comply with the 
Participant Confidentiality Requirements.
(iii) Market Disruption Events
    GSD Rule 50 and MBSD Rule 40 (Market Disruption and Force Majeure) 
\15\ (the ``Force Majeure Rule'') contain provisions that identify the 
events or circumstances that would be considered a Market Disruption 
Event, including, for example, events that lead to the suspension or 
limitation of trading or banking in the markets in which FICC operates, 
or the unavailability or failure of any material payment, bank 
transfer, wire or securities settlement systems.\16\ The Force Majeure 
Rule set forth in MBSD Rule 40 is also incorporated into the EPN Rules, 
and EPN Users are treated as Members for purposes of the EPN Rules, and 
references to ``Rules'' and ``Procedures'' are treated as references to 
EPN Rules for purposes of the EPN Rules.\17\ Under the Force Majeure 
Rule, during the pendency of a Market Disruption Event, FICC would be 
entitled to (i) suspend the provision of any or all services and (ii) 
take, or refrain from taking, or require Members to take, or refrain 
from taking, any actions FICC considers appropriate to address, 
alleviate, or mitigate the event and facilitate the continuation of 
FICC's services as may be practicable.\18\
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    \15\ GSD Rule 50 and MBSD Rule 40, supra note 3. The Force 
Majeure Rule is identical in the GSD Rules and the MBSD Rules.
    \16\ Id.
    \17\ See Section 5 of EPN Rule 1 of Article III of the EPN 
Rules, supra note 3.
    \18\ Id.
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    Section 2 of the Force Majeure Rule provides that the Board of 
Directors may determine the existence of a Market Disruption Event and 
the actions to be taken in response thereto.\19\ However, if the Board 
of Directors is unable to convene, the Force Majeure Rule provides that 
certain officers may make such determination, on an interim basis, 
which determination is then ratified, modified or rescinded as soon as 
practicable by the Board of Directors. The officers that may make such 
determination are all senior executive officers of FICC: Chief 
Executive Officer, Chief Financial Officer, Group Chief Risk Officer 
and General Counsel.
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    \19\ Section 2 of GSD Rule 50 and Section 2 of MBSD Rule 40, 
supra note 3.
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    The proposed rule change would add two senior executive officers of 
FICC, the Chief Information Officer and the Head of Clearing Agency 
Services, to the list of officers that could make such determination if 
the Board of Directors is unable to convene. These two officers, like 
the other senior executive officers currently listed in the Rules, 
maintain senior executive level positions at FICC, oversee divisions of 
FICC, and hold positions at FICC that would provide them a necessary 
global view into FICC's operations and systems to enable them to 
determine the existence of a Market Disruption Event in the event that 
the Board of Directors in unable to convene. Adding these two 
additional officers would facilitate FICC's ability to implement its 
emergency procedures in the event of a Market Disruption Event.

[[Page 36802]]

(iv) Systems Disconnect: Threat of Significant Impact to FICC's Systems
    The proposed rule change would add a new GSD Rule 50A and an 
identical new MBSD Rule 40A (Systems Disconnect: Threat of Significant 
Impact to the Corporation's Systems) (``Systems Disconnect Rule'') that 
would address situations in which FICC determines it is necessary for 
FICC to disconnect a single or limited number of Members, or third 
party service providers or service bureaus used by Members to connect 
to FICC \20\ (collectively, ``DTCC Systems Participants'') from FICC's 
systems or network due to an imminent threat of harm to FICC's or 
DTCC's systems. The imminent threat could be the result of a system 
disruption or cyber incident applicable to the DTCC Systems 
Participants. This would allow DTCC to work with the affected 
participants while protecting FICC, its systems and its other 
participants. Like the Force Majeure Rule set forth in MBSD Rule 40, 
the new MBSD Rule 40A would be incorporated into the EPN Rules, and EPN 
Users would be treated as Members, and references to ``Rules'' and 
``Procedures'' would be treated as references to EPN Rules for purposes 
of the EPN Rules.
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    \20\ Some Members use third parties to connect to FICC's systems 
and/or to send data to FICC and receive data from FICC on the 
Member's or EPN User's behalf. Such third parties are referred to as 
``service providers'' or ``service bureaus'' herein.
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    The proposed Systems Disconnect Rule would be structured similarly 
to the Force Majeure Rule. The Systems Disconnect Rule would address 
FICC's authority to take certain actions upon the occurrence, and 
during the pendency, of a Major Event. A ``Major Event'' would be 
defined as the happening of one or more ``Systems Disruption(s)'' (as 
defined below) that is reasonably likely to have a significant impact 
on FICC's operations, including the ``DTCC Systems'' (as defined 
below), that affect the business, operations, safeguarding of 
securities or funds, or physical functions of Members and/or other 
market participants. ``Systems Disruption'' would be defined as the 
unavailability, failure, malfunction, overload, or restriction (whether 
partial or total) of a DTCC Systems Participant's systems that disrupts 
or degrades the normal operation of such DTCC Systems Participant's 
systems; or anything that impacts or alters the normal communication or 
the files that are received, or information transmitted, to or from the 
DTCC Systems. ``DTCC Systems'' would be defined as the systems, 
equipment and technology networks of DTCC, FICC and/or their 
Affiliates,\21\ whether owned, leased, or licensed, software, devices, 
IP addresses or other addresses or accounts used in connection with 
providing the services set forth in the Rules, or used to transact 
business or to manage the connection with FICC.
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    \21\ Affiliate is defined in GSD Rule 1 and MBSD Rule 1, as 
applicable, and is intended to cover DTCC and DTCC's other 
subsidiaries that use shared systems with FICC. GSD Rule 1 and MBSD 
Rule 1, supra note 3. See description of the shared systems of DTCC, 
FICC and DTCC's other subsidiaries, supra note 14.
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    The proposed Systems Disconnect Rule would allow FICC to mitigate 
the effect of such events by facilitating the continuity of services 
(or, if deemed necessary, the temporary suspension of services). To 
that end, under the proposed Systems Disconnect Rule, FICC would be 
entitled, during the pendency of a Major Event, to (1) disconnect a 
DTCC Systems Participant's systems from the DTCC Systems, (2) suspend 
the receipt and/or transmission of files or communications to or from 
the DTCC Systems Participant to the DTCC Systems and/or (3) take, or 
refrain from taking, or require a DTCC Systems Participant to take or 
refrain from taking, any actions that FICC considers appropriate to 
prevent, address, correct, mitigate or alleviate the Major Event and 
facilitate the continuation of services as may be practicable and, in 
that context, issue instructions to the DTCC Systems Participant.
    The proposed Systems Disconnect Rule would define the governance 
procedures for how FICC would determine whether, and how, to implement 
the provisions of the rule. A determination that a Major Event has 
occurred could be made by the same officers with delegated authority 
under the Force Majeure Rule as discussed above (an ``Officer Major 
Event Action''). Following this determination, any management committee 
on which all of the foregoing officers serve would convene, and FICC 
would convene a Board of Directors meeting as soon as practicable 
thereafter, and in any event within five Business Days following such 
determination, in each case, to ratify, modify, or rescind the Officer 
Major Event Action. The proposed Systems Disconnect Rule would require 
Members to notify FICC immediately upon becoming aware of a Major 
Event, and, likewise, would require FICC to promptly notify the DTCC 
Systems Participant(s) of any action FICC takes or intends to take with 
respect to such DTCC Systems Participant(s) pursuant to the proposed 
rule.
    Finally, the Systems Disconnect Rule would address certain 
miscellaneous matters including: (i) A limitation of liability for any 
failure or delay in performance, in whole or in part of FICC's 
obligations under the Rules, arising out of or related to a Major 
Event, (ii) a statement that the power of FICC to take any action 
pursuant to the Systems Disconnect Rule also includes the power to 
repeal, rescind, revoke, amend or vary such action, (iii) a statement 
that the powers of FICC pursuant to the Systems Disconnect Rule shall 
be in addition to and not in derogation of, authority granted elsewhere 
in the Rules to take action as specified therein, (iv) a requirement 
that Members shall keep any DTCC Confidential Information (as defined 
below) provided to them by FICC and/or in connection with a Major Event 
confidential and (v) a statement that in the event of any conflict 
between the provisions of the Systems Disconnect Rule and any other 
Rules or Procedures, the provisions of the Systems Disconnect Rule 
would prevail.
(v) Proposed Rule Changes
    The proposed rule change would amend the Rules to make the 
following changes to implement the changes discussed above:
FICC Confidentiality Requirements Changes
    The proposed rule change would amend the FICC Confidentiality 
Requirements in Section 5 of GSD Rule 2A,\22\ Section 4 of GSD Rule 
3,\23\ Section 10 of GSD Rule 3,\24\ Section 2(j) of GSD Rule 3A,\25\ 
Section 3(e) of GSD Rule 3B,\26\ Section 5(k) of GSD Rule 3B,\27\ 
Section 6 of MBSD Rule 2A,\28\ Section 3 of MBSD Rule 3,\29\ Section 9 
of MBSD Rule 3 \30\ and Section 9 of EPN Rule 1 of Article III of the 
EPN Rules.\31\ to state as follows:
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    \22\ Section 5 of GSD Rule 2A, supra note 3.
    \23\ Section 4 of GSD Rule 3, supra note 3.
    \24\ Section 10 of GSD Rule 3, supra note 3.
    \25\ Section 2(j) of GSD Rule 3A, supra note 3.
    \26\ Section 3(e) of GSD Rule 3B, supra note 3.
    \27\ Section 5(k) of GSD Rule 3B, supra note 3.
    \28\ Section 6 of MBSD Rule 2A, supra note 3.
    \29\ Section 3 of MBSD Rule 3, supra note 3.
    \30\ Section 9 of MBSD Rule 3, supra note 3.
    \31\ Section 9 of EPN Rule 1 of Article III of the EPN Rules, 
supra note 3.
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    [A]ny non-public information furnished to the Corporation pursuant 
to this Rule shall be held in confidence as may be required under the 
laws, rules and regulations applicable to the Corporation that relate 
to the confidentiality of records.
    As discussed above, the proposed language is intended to provide 
one

[[Page 36803]]

standard that FICC would apply uniformly to all participants, which 
assures participants that such information would be held in confidence 
with appropriate controls. FICC would add ``non-public'' when 
describing the information that is subject to the FICC Confidentiality 
Requirements to make it clear that such requirements would only apply 
to information that is not public. In addition, in Section 5 of GSD 
Rule 2A,\32\ Section 4 of GSD Rule 3,\33\ Section 2(j) of GSD Rule 3A 
\34\ and Section 3(e) of GSD Rule 3B,\35\ FICC would remove the phrase 
``Except as otherwise provided in Rule 29'' or ``Except as otherwise 
provided in Rule 29 (Clearing Data)'' because the exception would no 
longer be needed with the addition of the proposed language. GSD Rule 
29 \36\ relates to the ability of FICC to release ``Clearing Data'' 
under certain circumstances. Because GSD Rule 29 would be a rule 
applicable to FICC, it would be covered by the proposed language which 
states that FICC would hold the information in confidence subject to 
rules applicable to it. FICC would remove a similar reference to MBSD 
Rule 22 \37\ in Section 6 of MBSD Rule 2A \38\ and Section 3 of MBSD 
Rule 3 \39\ for the same reason. FICC would also amend a sentence in 
the Board Statements of Policy in the GSD Rules that references the 
FICC Confidentiality Requirements set forth in GSD Rule 3 to reflect 
the proposed updated language.
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    \32\ Section 5 of GSD Rule 2A, supra note 3.
    \33\ Section 4 of GSD Rule 3, supra note 3.
    \34\ Section 2(j) of GSD Rule 3A, supra note 3.
    \35\ Section 3(e) of GSD Rule 3B, supra note 3.
    \36\ GSD Rule 29, supra note 3.
    \37\ MBSD Rule 22, supra note 3.
    \38\ Section 6 of MBSD Rule 2A, supra note 3.
    \39\ Section 3 of MBSD Rule 3, supra note 3.
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    Certain Rules relating to FICC Confidentiality Requirements would 
also include language relating to Participant Confidentiality 
Requirements as described below.
Participant Confidentiality Requirements
    In order to provide for Participant Confidentiality Requirements, 
FICC would add provisions in Section 5 of GSD Rule 2A,\40\ Section 4 of 
GSD Rule 3,\41\ Section 2(j) of GSD Rule 3A,\42\ Section 3(e) of GSD 
Rule 3B,\43\ Section 6 of MBSD Rule 2A,\44\ Section 3 of MBSD Rule 
3,\45\ and Section 9 of EPN Rule 1 of Article III of the EPN Rules \46\ 
to state that each participant shall maintain DTCC Confidential 
Information in confidence to the same extent and using the same means 
it uses to protect its own confidential information, but no less than a 
reasonable standard of care, and shall not use DTCC Confidential 
Information or disclose DTCC Confidential Information to any third 
party except as necessary to perform its obligations under the Rules or 
as otherwise required by applicable law. FICC would add a new 
definition of DTCC Confidential Information in GSD Rule 1 and MBSD Rule 
1 \47\ to provide that ``DTCC Confidential Information'' would mean all 
non-public information provided by DTCC and/or FICC that (i) is marked 
or otherwise identified in writing prior to disclosure to the recipient 
as confidential, (ii) is designated by DTCC or FICC as confidential, or 
(iii) the recipient knows or, under the circumstances surrounding 
disclosure, ought to reasonably know is confidential. FICC would also 
add a definition of DTCC in GSD Rule 1 and MBSD Rule 1, and remove a 
corresponding definition in GSD Rule 22D and MBSD Rule 17B \48\ since 
it would be defined in GSD Rule 1 and MBSD Rule 1.
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    \40\ Section 5 of GSD Rule 2A, supra note 3.
    \41\ Section 4 of GSD Rule 3, supra note 3.
    \42\ Section 2(j) of GSD Rule 3A, supra note 3.
    \43\ Section 3(e) of GSD Rule 3B, supra note 3.
    \44\ Section 6 of MBSD Rule 2A, supra note 3.
    \45\ Section 3 of MBSD Rule 3, supra note 3.
    \46\ Section 9 of EPN Rule 1 of Article III of the EPN Rules, 
supra note 3.
    \47\ GSD Rule 1 and MBSD Rule 1, supra note 3.
    \48\ GSD Rule 22D and MBSD Rule 17B, supra note 3.
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    FICC would also add a statement in each provision relating to 
Participant Confidentiality Requirements that each participant 
acknowledges that a breach of its confidentiality obligations under the 
Rules may result in serious and irreparable harm to FICC and/or DTCC 
for which there is no adequate remedy at law. In the event of such a 
breach by the participant, FICC and/or DTCC would be entitled to seek 
any temporary or permanent injunctive or other equitable relief in 
addition to any monetary damages.
Force Majeure Rule Officer Additions
    The proposed rule change would add the Chief Information Officer 
and the Head of Clearing Agency Services to the list of officers that 
could make a determination of a Market Disruption Event if the Board of 
Directors is unable to convene in GSD Rule 50 and MBSD Rule 40.\49\
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    \49\ GSD Rule 50 and MBSD Rule 40, supra note 3.
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Systems Disconnect Rule
    The proposed rule change would add a new GSD Rule 50A and MBSD Rule 
40A entitled ``Systems Disconnect: Threat of Significant Impact to the 
Corporation's Systems'' that would address situations in which FICC 
determines it is necessary for FICC to disconnect a DTCC Systems 
Participant or DTCC Systems Participants from FICC's systems or network 
due to an imminent threat of harm to FICC's or DTCC's systems 
consistent with the description above. The proposed Systems Disconnect 
Rule would include new definitions for ``DTCC Systems,'' ``DTCC Systems 
Participant,'' ``Major Event'' and ``Systems Disruption'' consistent 
with the descriptions of the Systems Disconnect Rule above.
    References to the new GSD Rule 50A would be added to GSD Rule 3A, 
Section 17(b),\50\ GSD Rule 3B, Section 17(a) \51\ and GSD Rule 13, 
Section 4(m),\52\ in each case, to reflect that the new GSD Rule 50A 
would apply to Sponsored Members and Sponsoring Members, CCIT Members 
and Funds-Only Settling Bank Members, respectively, in the same manner 
as other GSD Rules, including GSD Rule 50. References to the new MBSD 
Rule 40A would be added to MBSD Rule 3A, Section (m) \53\ to reflect 
that the new MBSD Rule 40A would apply to Cash Settling Bank Members in 
the same manner as other MBSD Rules, including MBSD Rule 40. References 
to the new MBSD Rule 40A would also be added to Section 5 of EPN Rule 1 
of Article III of the EPN Rules \54\ to reflect that the new MBSD Rule 
40A would be incorporated into the EPN Rules in the same manner as 
other MBSD Rules, including MBSD Rule 40.
---------------------------------------------------------------------------

    \50\ GSD Rule 3A, Section 17(b), supra note 3.
    \51\ GSD Rule 3B, Section 17(a), supra note 3.
    \52\ GSD Rule 13, Section 4(m), supra note 3.
    \53\ MBSD Rule 3A, Section (m), supra note 3.
    \54\ Section 5 of EPN Rule 1 of Article III of the EPN Rules, 
supra note 3.
---------------------------------------------------------------------------

2. Statutory Basis
    FICC believes that the proposal 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 each of 
the proposed rule changes is consistent with Section 17A(b)(3)(F) of 
the Act,\55\ and Rules 17Ad-22(e)(1) and (e)(21) \56\ promulgated under 
the Act. In addition, FICC believes that the proposed changes to add 
the two senior executive officers in the Force Majeure Rule and to add 
the proposed Systems Disconnect Rule

[[Page 36804]]

are consistent with Rules 17Ad-22(e)(2) and (e)(17) under the Act.\57\
---------------------------------------------------------------------------

    \55\ 15 U.S.C. 78q-1(b)(3)(F).
    \56\ 17 CFR 240.17Ad-22(e)(1) and (e)(21).
    \57\ 17 CFR 240.17Ad-22(e)(2) and (e)(17).
---------------------------------------------------------------------------

Section 17A(b)(3)(F)
    Section 17A(b)(3)(F) of the Act \58\ requires, in part, that the 
Rules be designed to promote the prompt and accurate clearance and 
settlement of securities transactions, to assure the safeguarding of 
securities and funds which are in the custody or control of FICC or for 
which it is responsible and to remove impediments to and perfect the 
mechanism of a national system for the prompt and accurate clearance 
and settlement of securities transactions.
---------------------------------------------------------------------------

    \58\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    FICC believes that the proposed changes revising the FICC 
Confidentiality Requirements and adding the Participant Confidentiality 
Requirements are each consistent with this provision of the Act. The 
proposed revisions to the FICC Confidentiality Requirements are 
consistent with this provision because the proposed revisions would 
provide a clear and consistent standard relating to how FICC holds the 
information furnished by participants pursuant to Section 5 of GSD Rule 
2A,\59\ Section 4 of GSD Rule 3,\60\ Section 10 of GSD Rule 3,\61\ 
Section 2(j) of GSD Rule 3A,\62\ Section 3(e) of GSD Rule 3B,\63\ 
Section 5(k) of GSD Rule 3B,\64\ Section 6 of MBSD Rule 2A,\65\ Section 
3 of MBSD Rule 3,\66\ Section 9 of MBSD Rule 3 \67\ and Section 9 of 
EPN Rule 1 of Article III of the EPN Rules.\68\ The confidential 
information that FICC receives pursuant to these Rules is used by FICC 
to determine whether to admit a participant as a Member or EPN User, to 
continue to allow such participant to be a Member or EPN User, or to 
better understand the risks relating to each participant. Providing a 
clear and consistent standard would facilitate this process by allowing 
participants to better understand FICC's obligations with respect to 
such information and providing a uniform obligation for FICC with 
respect to such information. FICC believes that facilitating the 
ability of FICC to evaluate participants would promote the prompt and 
accurate clearance and settlement of securities transactions by FICC. 
As such, FICC believes the proposed rule changes are consistent with 
Section 17A(b)(3)(F) of the Act.\69\
---------------------------------------------------------------------------

    \59\ Section 5 of GSD Rule 2A, supra note 3.
    \60\ Section 4 of GSD Rule 3, supra note 3.
    \61\ Section 10 of GSD Rule 3, supra note 3.
    \62\ Section 2(j) of GSD Rule 3A, supra note 3.
    \63\ Section 3(e) of GSD Rule 3B, supra note 3.
    \64\ Section 5(k) of GSD Rule 3B, supra note 3.
    \65\ Section 6 of MBSD Rule 2A, supra note 3.
    \66\ Section 3 of MBSD Rule 3, supra note 3.
    \67\ Section 9 of MBSD Rule 3, supra note 3.
    \68\ Section 9 of EPN Rule 1 of Article III of the EPN Rules, 
supra note 3.
    \69\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    FICC also believes that the proposed rule change adding the 
Participant Confidentiality Requirements is consistent with this 
provision of the Act because the proposed revisions to the Participant 
Confidentiality Requirements would provide a clear and consistent 
contractual obligation for participants who are requesting confidential 
information from FICC. Having clear and consistent Rules would help 
participants to better understand their rights and obligations 
regarding FICC's clearance and settlement services. The information 
requested by participants that would be subject to the Participant 
Confidentiality Requirements would be used by participants to determine 
whether to participate in FICC's services, FICC system requirements and 
FICC system safeguards. FICC believes that when Members and EPN Users 
better understand their rights and obligations regarding FICC's 
clearance and settlement services, they can better act in accordance 
with the Rules. FICC believes that better enabling Members and EPN 
Users to comply with the Rules would promote the prompt and accurate 
clearance and settlement of securities transactions by FICC. As such, 
FICC believes the proposed rule changes are consistent with Section 
17A(b)(3)(F) of the Act.\70\
---------------------------------------------------------------------------

    \70\ Id.
---------------------------------------------------------------------------

    FICC believes that the proposed changes to add the two officers to 
make a determination of a Market Disruption Event and to add the 
Systems Disconnect Rule in the GSD Rules and the MBSD Rules are also 
consistent with this provision of the Act because those changes would 
enhance and streamline FICC's ability to take necessary actions in the 
event of a Market Disruption Event or a Major Event. Improving the 
ability of FICC to react to a Market Disruption Event or a Major Event 
would allow FICC to protect its participants and their ability to 
promptly and accurately clear and settle securities transactions, and 
allow FICC to safeguard securities and funds that are in its custody or 
control. In particular, allowing two additional officers that are able 
to make an interim determination of a Market Disruption Event in the 
event that the Board of Directors is unable to convene would add 
additional flexibility and tools to FICC while maintaining proper risk 
controls and improve the ability of FICC to act in the event of a 
Market Disruption Event. Also, providing for the ability of FICC to 
disconnect DTCC Systems Participants, suspend the receipt or 
transmission of files or communications to or from a DTCC Systems 
Participant, and/or require the DTCC Systems Participant to take such 
other actions as are necessary to protect FICC and its participants 
would, in each case, provide additional tools for FICC in the event of 
a Major Event.
    Improving the governance around the determination of a Market 
Disruption Event, and the implementation of procedures allowing FICC to 
disconnect a DTCC Systems Participant or DTCC Systems Participants from 
FICC's systems or network due to an imminent threat of harm, would 
improve FICC's ability to address and minimize losses to FICC and its 
participants. Risks, threats and potential vulnerabilities due to a 
Market Disruption Event or a Major Event could impact FICC's ability to 
clear and settle securities transactions, or to safeguard the 
securities and funds which are in its custody or control, or for which 
it is responsible. In addition, providing governance around the ability 
to disconnect a DTCC Systems Participant that is having a systems 
disruption that could disrupt the ability of FICC or other DTCC Systems 
Participants from using FICC's systems would remove impediments to and 
perfect the mechanism of a national system for the prompt and accurate 
clearance and settlement of securities transactions. Although 
disconnecting or limiting the service of a DTCC Systems Participant in 
the event of a Major Event would likely be an impediment to such DTCC 
Systems Participant, improving FICC's ability to address and minimize 
losses to FICC and its participants, and reducing risks, threats and 
potential vulnerabilities due to a Major Event that could impact FICC's 
ability to clear and settle securities transactions, or to safeguard 
the securities and funds which are in its custody or control or for 
which it is responsible, would be consistent with Section 17A(b)(3)(F) 
of the Act.\71\
---------------------------------------------------------------------------

    \71\ Id.
---------------------------------------------------------------------------

    Therefore, by implementing tools that would help to mitigate these 
risks, FICC believes that the proposed rule change would promote the 
prompt and accurate clearance and settlement of securities 
transactions, assure the safeguarding of securities and funds which are 
in the custody or control of FICC or for which it is responsible, and 
remove impediments to and perfect the mechanism of a national system 
for the prompt and accurate clearance and

[[Page 36805]]

settlement of securities transactions, consistent with the requirements 
of Section 17A(b)(3)(F) of the Act.\72\
---------------------------------------------------------------------------

    \72\ Id.
---------------------------------------------------------------------------

Rule 17Ad-22(e)(1)
    In addition, the proposed rule change is designed to be consistent 
with Rule 17Ad-22(e)(1) promulgated under the Act,\73\ which requires 
FICC to establish, implement, maintain and enforce written policies and 
procedures reasonably designed to provide for a well-founded, clear, 
transparent and enforceable legal basis for each aspect of its 
activities in all relevant jurisdictions.
---------------------------------------------------------------------------

    \73\ 17 CFR 240.17Ad-22(e)(1).
---------------------------------------------------------------------------

    Establishing clear and consistent rules for each participant with 
respect to the FICC Confidentiality Requirements would allow FICC to 
maintain one confidentiality standard for all participants rather than 
maintaining potentially different confidentiality standards for 
participants based on the various, unrelated regulatory bodies 
governing such participants. In addition, setting forth a clear 
contractual obligation relating to Participant Confidentiality 
Requirements would enhance the understanding of the participants 
receiving information from FICC and allow FICC to treat participants 
equally with respect to how the information furnished to participants 
should be protected by the participants.
    Adding the two officers to make a determination of a Market 
Disruption Event and adding the Systems Disconnect Rule are also 
consistent with Rule 17Ad-22(e)(1) under the Act because those changes 
would describe the circumstances under which FICC could take actions in 
the event of a Market Disruption Event or a Major Event that are 
necessary to protect FICC and its participants. Providing clear 
guidelines with respect to Market Disruption Events and Major Events 
would allow participants to understand the rights and obligations of 
the participants in the event of a Market Disruption Event or a Major 
Event.
    Therefore, by establishing uniform and clear standards with respect 
to its receipt and furnishing of confidential information, and by 
providing clear rights and obligations of FICC and its participants 
with respect to Market Disruption Events and Major Events, FICC 
believes that the proposed rule change is consistent with the 
requirements of Rule 17Ad-22(e)(1) promulgated under the Act.\74\
---------------------------------------------------------------------------

    \74\ Id.
---------------------------------------------------------------------------

Rule 17Ad-22(e)(21)
    In addition, the proposed rule change is designed to be consistent 
with Rule 17Ad-22(e)(21) promulgated under the Act,\75\ which requires 
FICC to, inter alia, establish, implement, maintain and enforce written 
policies and procedures reasonably designed to be efficient and 
effective in meeting the requirements of its participants and the 
markets it serves. The proposed rule change would streamline the FICC 
Confidentiality Requirements by providing that FICC would apply one 
standard for all participants relating to confidential information sent 
to FICC by participants, which would enhance (i) efficiency by avoiding 
applying varying standards of confidentiality based on the rules and 
regulations of the varying regulatory bodies that regulate the 
participants, and (ii) effectiveness by reducing potential conflicts of 
laws and providing equal treatment to participants relating to such 
confidential information.
---------------------------------------------------------------------------

    \75\ 17 CFR 240.17Ad-22(e)(21).
---------------------------------------------------------------------------

    The addition of the Participant Confidentiality Requirements would 
also provide a uniform and easily discernable requirement for all 
participants with respect to confidential information provided by FICC 
allowing FICC to provide necessary information to such participants in 
a safe and efficient manner. Adding two additional officers that are 
able to make an interim determination of a Market Disruption Event in 
the event that the Board of Directors is unable to convene would add 
additional flexibility and tools to FICC while maintaining proper risk 
controls and improve the ability of FICC to act quickly, efficiently 
and effectively in a Market Disruption Event to address and minimize 
losses. Also, providing for the ability of FICC to disconnect DTCC 
Systems Participants, suspend the receipt or transmission of files or 
communications to or from a DTCC Systems Participant, and/or require 
the DTCC Systems Participant to take such other actions as are 
necessary to protect FICC and its participants would, in each case, 
provide additional tools for FICC in the event of a Major Event and 
improve FICC's ability to act quickly, efficiently and effectively in 
the event of a Major Event to address and minimize losses.
    Therefore, by establishing a more efficient and effective process 
for the treatment of confidential language, and establishing procedures 
designed to improve FICC's ability to act quickly, efficiently and 
effectively in the event of a Market Disruption Event and a Major 
Event, FICC believes that the proposed rule change is consistent with 
the requirements of Rule 17Ad-22(e)(21) promulgated under the Act.\76\
---------------------------------------------------------------------------

    \76\ Id.
---------------------------------------------------------------------------

Rule 17Ad-22(e)(2)
    In addition, the proposed rule change is designed to be consistent 
with Rule 17Ad-22(e)(2) promulgated under the Act,\77\ which requires 
FICC to, inter alia, establish, implement, maintain and enforce written 
policies and procedures reasonably designed to provide for governance 
arrangements that are clear and transparent and that specify clear and 
direct lines of responsibility.
---------------------------------------------------------------------------

    \77\ 17 CFR 240.17Ad-22(e)(2).
---------------------------------------------------------------------------

    Adding two additional officers that are able to make an interim 
determination of a Market Disruption Event in the event that the Board 
of Directors is unable to convene would add additional flexibility and 
tools to FICC while maintaining proper risk controls, and improve the 
ability of FICC to act quickly, efficiently and effectively in a Market 
Disruption Event and mitigate any impact from such Market Disruption 
Event. Adding these officers to the governance procedures relating to a 
determination of a Market Disruption Event would make such governance 
procedures clear and transparent, and specify clear and direct lines of 
responsibility with respect to the determination of a Market Disruption 
Event, consistent with Rule 17Ad-22(e)(2) under the Act.\78\
---------------------------------------------------------------------------

    \78\ Id.
---------------------------------------------------------------------------

    Adding the governance procedures relating to making a determination 
of a Major Event in the Systems Disconnect Rule is also consistent with 
Rule 17Ad-22(e)(2) promulgated under the Act.\79\ Identifying the 
officers that have the ability to determine if there is a Major Event, 
and providing for the ability of any management committee on which all 
of such officers serve and the Board of Directors to ratify, modify or 
rescind any determination of a Major Event by an officer would make 
such governance procedures clear and transparent, and specify clear and 
direct lines of responsibility with respect to the determination of a 
Major Event, consistent with Rule 17Ad-22(e)(2).\80\
---------------------------------------------------------------------------

    \79\ Id.
    \80\ Id.
---------------------------------------------------------------------------

Rule 17Ad-22(e)(17)
    In addition, the proposed rule change is designed to be consistent 
with Rule 17Ad-22(e)(17)(i) promulgated under the Act,\81\ which 
requires FICC to establish, implement, maintain and

[[Page 36806]]

enforce written policies and procedures reasonably designed to manage 
the covered clearing agency's operational risks by identifying the 
plausible sources of operational risk, both internal and external, and 
mitigating their impact through the use of appropriate systems, 
policies, procedures, and controls.
---------------------------------------------------------------------------

    \81\ 17 CFR 240.17Ad-22(e)(17)(i).
---------------------------------------------------------------------------

    Adding two additional officers that are able to make an interim 
determination of a Market Disruption Event in the event that the Board 
of Directors is unable to convene would add additional flexibility and 
tools to FICC while maintaining proper risk controls and improve the 
ability of FICC to act quickly, efficiently and effectively in a Market 
Disruption Event and mitigate any impact from such Market Disruption 
Event. Also, providing for the ability of FICC to disconnect DTCC 
Systems Participants, suspend the receipt or transmission of files or 
communications to or from a DTCC Systems Participant, and/or require 
the DTCC Systems Participant to take such other actions as are 
necessary to protect FICC and its participants would, in each case, 
provide additional tools for FICC in the event of a Major Event and 
improve FICC's ability to act quickly, efficiently and effectively in 
the event of a Major Event and mitigate any impact from such Major 
Event.
    Therefore, by providing clear, efficient procedures of FICC and its 
participants with respect to Market Disruption Events and Major Events 
that help identify and mitigate operational risks, FICC believes that 
the proposed rule change is consistent with the requirements of Rule 
17Ad-22(e)(17)(i) promulgated under the Act.\82\
---------------------------------------------------------------------------

    \82\ Id.
---------------------------------------------------------------------------

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

    FICC does not believe that the proposed changes relating to the 
FICC Confidentiality Requirements would have any impact on competition. 
These changes would provide one standard for how FICC treats 
participant information furnished subject to the FICC Confidentiality 
Requirements but would not affect the information that the participants 
are required to provide or affect the manner in which the participants 
must provide the information. As such, FICC believes these proposed 
rule changes would not have any impact on competition.
    FICC does not believe the proposed changes relating to adding 
Participant Confidentiality Requirements would have any impact on 
competition. Although the addition of the Participant Confidentiality 
Requirements would be adding obligations on participants with respect 
to how they treat confidential or proprietary information of FICC or 
its affiliates, such obligations would be minimal because FICC would 
only require that such participants hold such confidential information 
using the same means they use to protect their own confidential 
information but not less than a reasonable standard of care. The use of 
this standard would protect FICC by providing a clear legal obligation 
to protect such information but would not be burdensome or expensive 
for participants, and therefore FICC believes that it would not have 
any impact on competition.
    FICC does not believe the changes relating to adding the two 
officers to make a determination of a Market Disruption Event would 
have any impact on competition. The proposed rule change would add two 
senior executive officers of FICC, the Chief Information Officer and 
the Head of Clearing Agency Services, to the list of officers that 
could make a determination of a Market Disruption Event if the Board of 
Directors is unable to convene. Such addition would provide additional 
officers who could determine whether there is a Market Disruption Event 
but would not otherwise affect the rights of participants or FICC in 
the determination of a Market Disruption Event or if a Market 
Disruption Event is declared. Therefore, FICC does not believe that the 
addition of the two officers would have any impact on competition.
    FICC does not believe that the changes relating to adding the 
Systems Disconnect Rule would have any impact, or impose any burden, on 
competition not necessary or appropriate in furtherance of the purposes 
of the Act.\83\ To the extent that FICC determines that there is a 
Major Event, it could take or refrain from taking actions, or require 
participants to take or refrain from taking actions, that could burden 
competition because such requirements could cause participants to incur 
additional costs, allow FICC to suspend services or communications or 
disconnect a DTCC Systems Participant from the DTCC Systems. FICC 
believes such burden on competition could be significant but would be 
both necessary and appropriate in furtherance of the purposes of the 
Act, as permitted by Section 17A(b)(3)(I) of the Act,\84\ for the 
reasons described below.
---------------------------------------------------------------------------

    \83\ 15 U.S.C. 78q-1(b)(3)(I).
    \84\ Id.
---------------------------------------------------------------------------

    FICC believes that the proposed changes to add the Systems 
Disconnect Rule are necessary in furtherance of the purposes of Section 
17A(b)(3)(F) of the Act,\85\ and Rules 17Ad-22(e)(1), (e)(2), (e)(17) 
and (e)(21) promulgated under the Act.\86\ The proposed changes to add 
the Systems Disconnect Rule would (i) improve the ability of FICC to 
react to a Major Event allowing FICC to protect itself and its 
participants and their ability to promptly and accurately clear and 
settle securities transactions, and allow FICC to safeguard securities 
and funds that are in its custody or control, consistent with the 
requirements of Section 17A(b)(3)(F) of the Act,\87\ (ii) provide clear 
guidelines with respect to Major Events that would allow participants 
to understand the rights and obligations of the participants and FICC 
in the event of a Major Event, consistent with Rule 17Ad-22(e)(1) 
promulgated under the Act,\88\ (iii) identify the officers that have 
the ability to determine if there is a Major Event, and provide for the 
ability of any management committee on which all of such officers 
serve, and the Board of Directors, to ratify, modify or rescind any 
determination of a Major Event by an officer, which would make such 
governance procedures clear and transparent, and specify clear and 
direct lines of responsibility with respect to the determination of a 
Major Event, consistent with Rule 17Ad 22(e)(2) promulgated under the 
Act,\89\ (iv) improve the ability of FICC to act quickly, efficiently 
and effectively in the event of a Major Event, and mitigate any impact 
from such event by providing clear, efficient procedures of FICC and 
its participants with respect to such event consistent with the 
requirements of Rule 17Ad-22(e)(17)(i) promulgated under the Act \90\ 
and (v) establish procedures designed to improve FICC's ability to act 
quickly, efficiently and effectively in the event of a Major Event, 
consistent with the requirements of Rule 17Ad-22(e)(21) promulgated 
under the Act.\91\
---------------------------------------------------------------------------

    \85\ 15 U.S.C. 78q-1(b)(3)(F).
    \86\ 17 CFR 240.17Ad-22(e)(1), (e)(2), (e)(17) and (e)(21).
    \87\ 15 U.S.C. 78q-1(b)(3)(F).
    \88\ 17 CFR 240.17Ad-22(e)(1).
    \89\ 17 CFR 240.17Ad-22(e)(2).
    \90\ 17 CFR 240.17Ad-22(e)(17)(i).
    \91\ 17 CFR 240.17Ad-22(e)(21).
---------------------------------------------------------------------------

    In addition, FICC believes that the proposed changes to add the 
Systems Disconnect Rule are appropriate in furtherance of the Act. Such 
changes have been designed to improve the ability of FICC to act 
quickly, efficiently and effectively in the event of a Major Event, and 
mitigate any impact from such event while also providing the

[[Page 36807]]

participants clear guidelines with respect to such event to allow 
participants to understand their rights and obligations. Such changes 
have also been designed to apply uniformly to all Members and EPN Users 
in the event of a Major Event and should not affect FICC's day-to-day 
operations under normal circumstances, or in the management of a 
typical Member or EPN User default scenario or non-default event.
    Therefore, FICC does not believe that the proposed rule change 
would impose any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act.\92\
---------------------------------------------------------------------------

    \92\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------

(C) Clearing Agency's Statement on Comments on the Proposed Rule Change 
Received From Members, Participants, or Others

    FICC has not received or solicited any written comments relating to 
this proposal. 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

    Within 45 days of the date of publication of this notice in the 
Federal 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 such 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-FICC-2021-004 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-2021-004. 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 DTCC'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-2021-004 and should be submitted on 
or before August 3, 2021.
---------------------------------------------------------------------------

    \93\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\93\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-14796 Filed 7-12-21; 8:45 am]
BILLING CODE 8011-01-P