Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify the FICC Government Securities Division Rulebook, FICC Mortgage-Backed Securities Division Clearing Rules, and FICC Mortgage-Backed Securities Division EPN Rules, 36822-36826 [2021-14802]

Download as PDF 36822 Federal Register / Vol. 86, No. 131 / Tuesday, July 13, 2021 / Notices promulgated under the Act,46 (iv) improve the ability of NSCC 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 NSCC and its participants with respect to such event, consistent with the requirements of Rule 17Ad–22(e)(17)(i) promulgated under the Act 47 and (v) establish procedures designed to improve NSCC’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.48 In addition, NSCC 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 NSCC to act quickly, efficiently and effectively in the event of a Major Event, and mitigate any impact from such event while also providing the Members and Limited Members 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 Limited Members in the event of a Major Event and should not affect NSCC’s day-to-day operations under normal circumstances, or in the management of a typical Member or Limited Member default scenario or non-default event. Therefore, NSCC 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.49 jbell on DSKJLSW7X2PROD with NOTICES (C) Clearing Agency’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others NSCC has not received or solicited any written comments relating to this proposal. NSCC will notify the Commission of any written comments received by NSCC. 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 46 17 CFR 240.17Ad–22(e)(2). CFR 240.17Ad–22(e)(17)(i). 48 17 CFR 240.17Ad–22(e)(21). 49 15 U.S.C. 78q–1(b)(3)(I). 47 17 VerDate Sep<11>2014 17:47 Jul 12, 2021 Jkt 253001 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 rule-comments@ sec.gov. Please include File Number SR– NSCC–2021–007 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–NSCC–2021–007. 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 NSCC and on DTCC’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 PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 should refer to File Number SR–NSCC– 2021–007 and should be submitted on or before August 3, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.50 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–14791 Filed 7–12–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–92340; File No. SR–FICC– 2021–005] Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify the FICC Government Securities Division Rulebook, FICC Mortgage-Backed Securities Division Clearing Rules, and FICC Mortgage-Backed Securities Division EPN Rules 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 30, 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. 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 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 of FICC consists of modifications to the FICC Government Securities Division (‘‘GSD’’) Rulebook (‘‘GSD Rules’’), the FICC Mortgage-Backed Securities Division (‘‘MBSD’’) Clearing Rules (‘‘MBSD Rules’’) and the FICC MBSD EPN Rules (‘‘EPN Rules,’’ and together with the GSD Rules and the MBSD Rules, the ‘‘Rules’’) 5 in order to (i) 50 17 CFR 200.30–3(a)(12). 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 used herein and not defined shall have the meanings assigned to such terms in the GSD Rules, MBSD Rules and EPN Rules, as applicable, available at https://www.dtcc.com/legal/ rules-and-procedures.aspx. 1 15 E:\FR\FM\13JYN1.SGM 13JYN1 Federal Register / Vol. 86, No. 131 / Tuesday, July 13, 2021 / Notices correct or clarify the use of certain defined terms in the Rules, (ii) make certain clarifications and corrections in the Rules, and (iii) make certain technical changes to the Rules, each as described in more detail below. II. Clearing Agency’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the clearing agency included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The clearing agency has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. (A) Clearing Agency’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose FICC is proposing to (i) correct the use of certain defined terms in the Rules, (ii) make certain clarifications and corrections in the Rules, and (iii) make certain technical changes to the Rules, each as described in more detail below. (i) Proposal To Correct or Clarify the Use of Certain Defined Terms in the Rules jbell on DSKJLSW7X2PROD with NOTICES A. Proposal To Delete Terms That Are no Longer Used in the Rules FICC is proposing to remove the following defined terms and related descriptions, as applicable, in the Rules: • ‘‘GCF Securities Account’’ in GSD Rule 1 and the phrase ‘‘and for which the Corporation establishes a GCF Securities Account’’ in the defined term ‘‘GCF Clearing Agent Bank’’ in GSD Rule 1 because these provisions relate to the interbank service of the GCF Repo Service, which FICC does not expect to reinstitute.6 6 In 2016, the Commission approved FICC’s proposed rule change to suspend the interbank service of the GCF Repo Service. The GCF Repo Service has operated on both an ‘‘interbank’’ and ‘‘intrabank’’ basis. ‘‘Interbank’’ means that the two GCF Repo Participants, which have been matched in a GCF Repo transaction, each clear at a different clearing bank. See Securities Exchange Act Release No. 78206 (June 30, 2016), 81 FR 44388 (July 7, 2016) (SR–FICC–2016–002). ‘‘Intrabank’’ means that the two GCF Repo Participants, which have been matched in a GCF Repo transaction, clear at the same clearing bank. FICC does not expect to reinstitute the interbank service of the GCF Repo Service at this time and removed all references to this service from the GSD Rules in 2020. See Securities Exchange Act Release No. 88766 (April 29, 2020), 85 FR 26747 (May 5, 2020) (SR–FICC–2020–005) (‘‘FICC Clean-Up Changes Filing’’). VerDate Sep<11>2014 17:47 Jul 12, 2021 Jkt 253001 • ‘‘and Clearing Fund Funds-Only Settlement Amount’’ in the defined term ‘‘Opening Balance’’ in GSD Rule 1 because ‘‘Clearing Fund Funds-Only Settlement Amount’’ is no longer a defined term in the GSD Rules.7 • the defined term ‘‘Direct Transaction’’ in MBSD Rule 1 because this defined term is no longer used in the MBSD Rules (it was used in a previous version of the rules relating to loss allocation). • the defined term ‘‘Eligible Letter of Credit’’ in MBSD Rule 1 because this defined term is no longer used in the MBSD Rules (it is no longer a required form of Clearing Fund). • the defined term ‘‘TBA Comparison’’ from MBSD Rule 1 because this defined term is not used in the MSBD Rules and is also duplicative (it has the same definition as the defined term ‘‘Trade Comparison’’). • the defined term ‘‘GCF Collateral Excess Account’’ in MBSD Rule 1 because this is a typographical error and was inadvertently included in the MBSD Rules. GCF Collateral Excess Account is only relevant to the GSD Rules, not the MBSD Rules. B. Proposal To Revise References To Reflect the Existing Defined Terms and Related Changes FICC is proposing to capitalize references to the following words to reflect the existing defined terms in their respective Rules: • ‘‘registered clearing agencies’’ in GSD Rule 36 and EPN Article V, Rule 10 • ‘‘clearing agency’’ in EPN Article V, Rule 14 As described above, because FICC is proposing to capitalize the references to registered clearing agencies and clearing agencies in the EPN Rules in order to be consistent with the GSD Rules and MSBD Rules, FICC is also proposing to add the defined terms ‘‘Registered Clearing Agency’’ and ‘‘Clearing Agency to EPN Article I, Rule 1 to enhance clarity. FICC is also proposing to revise ‘‘Securities and Exchange Commission’’ to ‘‘SEC’’ in GSD Rule 36 to reflect the existing defined term. In addition, FICC is proposing to add ‘‘EPN’’ before the references to ‘‘Rules’’ in EPN Article V, Rule 10 to reflect the existing defined term. 7 Most of the references to the term ‘‘Clearing Fund Funds-Only Settlement Amount’’ were deleted in the FICC Clean-Up Changes Filing because this is an outdated Clearing Fund component and should have been deleted when GSD moved to a VaR-based Clearing Fund methodology. See FICC Clean-up Changes Filing, supra note 6. PO 00000 Frm 00126 Fmt 4703 Sfmt 4703 36823 C. Proposal To Revise Capitalized Terms To Reflect That They Are Not Defined Terms FICC is proposing to revise the references from ‘‘Website’’ to ‘‘website’’ in Section 2 of GSD Rule 3 because ‘‘Website’’ is not a defined term. (ii) Proposal To Make Certain Clarifications and Corrections in the Rules A. Remove Certain Categories Where There Is no Charge Certain categories are included in the FICC MSBD Schedule of Charges Broker Account Group (‘‘Broker Schedule of Charges’’) and the FICC MSBD Schedule of Charges Dealer Account Group (‘‘Dealer Schedule of Charges’’) of the MBSD Rules and the FICC MSBD EPN Schedule of Charges in the EPN Rules even though there are no charges associated with those categories. As such, for simplicity and to enhance clarity, FICC is proposing to remove the category entitled ‘‘DK and Modify’’ from the subsection entitled ‘‘Trade Processing’’ under Section 1 of the Broker Schedule of Charges of the MBSD Rules. FICC is also proposing to remove the category entitled ‘‘DK and Modify’’ from the subsections entitled (a) ‘‘Trade Processing,’’ (b) ‘‘Trade-for-Trade Transactions, Specified Pool Trades, and Stipulated Trades,’’ and (c) ‘‘Option Trades’’ under Section I of the Dealer Schedule of Charges of the MBSD Rules. In addition, FICC is also proposing to remove certain categories from the sections entitled ‘‘Message Processing Fees’’ and ‘‘Pool Substitution Cancel/ Correct’’ in the FICC MSBD EPN Schedule of Charges. Specifically, FICC proposes to remove the following categories: • ‘‘DK Send or Receive:’’ • ‘‘Cancel Send or Receive:’’ • ‘‘Retransmission Request:’’ • ‘‘Cancel/Correct Receive:’’ • ‘‘Cancel/Correct DK Send or Receive:’’ • ‘‘Cancel/Correct Retransmission Request:’’ B. Clarify the Rules Related to Notification of Rule Changes In order to be consistent with similar provisions in the GSD Rules and the EPN Rules and to enhance clarity, FICC is also proposing to add ‘‘and Registered Clearing Agencies’’ to MBSD Rule 27. FICC believes this proposed change would clarify that FICC shall promptly notify Registered Clearing Agencies in addition to Members of any proposal to change, revise, add, or repeal any Rule. In addition, currently, GSD Rule 36 states that FICC would notify all E:\FR\FM\13JYN1.SGM 13JYN1 36824 Federal Register / Vol. 86, No. 131 / Tuesday, July 13, 2021 / Notices Members and registered clearing agencies of any rule change proposals, and MBSD Rule 27 states that FICC would notify all Members of any rule change proposals. Similarly, EPN Article V, Rule 10 states that FICC would notify all EPN Users and registered clearing agencies of any rule change proposals by posting the proposal on the FICC website. As a clearing agency registered with the Commission, the Act provides a clear framework under which FICC’s Rules are adopted and enforced. Under the rule change process, generally, before a proposed rule change may take effect, (i) the change and an explanatory statement must be filed with the Commission and posted by FICC on the FICC website, (ii) notice of the filing and the substantive terms or description of the change must be published by the Commission in the Federal Register for public review and comment, and (iii) the Commission must approve the change (or the change must otherwise be permitted to take effect). FICC’s Rules are filed with and reviewed by the Commission. As a clearing agency registered under Section 17A of the Act,8 a self-regulatory organization subject to Section 19 of the Act,9 and a systemically important financial market utility under Title VIII of Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (‘‘DoddFrank’’),10 FICC is required to follow: (1) A specified process 11 whenever it proposes a new rule or a change or amendment to its Rules and (2) a specified process 12 whenever it proposes to make a change to its rules, procedures or operations that could materially affect the nature or level of risks presented by FICC. These rule change processes provide notice to Members and provide an opportunity for those parties to comment on such changes. Rule 19b–4 under the Act requires that FICC post any rule change proposals on its website within two business days after the filing of a proposed rule change,13 post any rule changes that are approved by the Commission within two business days after it has been notified of the Commission’s approval 14 and post any rule change within two business days of 8 15 U.S.C. 78q–1. U.S.C. 78s. 10 12 U.S.C. 5465(e)(1). 11 This process is set forth in Section 19(b) of the Act and Rule 19b–4 thereunder. 15 U.S.C. 78s(b) and 17 CFR 240.19b–4. 12 This process is set forth in Section 806(e) of Dodd-Frank and Rule 19b–4 thereunder. 12 U.S.C. 5465(e) and 17 CFR 240.19b–4. 13 17 CFR 240.19b–4(l). 14 17 CFR 240.19b–4(m)(2). jbell on DSKJLSW7X2PROD with NOTICES 9 15 VerDate Sep<11>2014 17:47 Jul 12, 2021 Jkt 253001 the Commission’s notice of such proposed change for rule changes that are effective upon filing.15 FICC complies—and will continue to comply—with such notice requirements which it believes are adequate. C. Clarify Certain Provisions Regarding Notice to Interested Persons in the Rules FICC is proposing to revise certain provisions regarding notice to Interested Persons in GSD Rule 45, MBSD Rule 35 and EPN Article V, Rule 16. Specifically, in the second paragraph of Section 1 of GSD Rule 45, second paragraph of MSBD Rule 35, and EPN Article V, Rule 16, FICC proposes to revise ‘‘delivered’’ to ‘‘sufficiently served,’’ so the provision would state that FICC would deem a notice sufficiently served once such notice is posted to the website to be consistent with the other provisions in the first paragraph of Section 1 and Section 2 of GSD Rule 45, the first paragraph of Section 1 and Section 2 of MBSD Rule 35, and the first paragraph of EPN Article V, Rule 16. FICC would also revise GSD Rule 45, MBSD Rule 35, and EPN Article V, Rule 16 to state that it is the responsibility of the Interested Persons to retrieve notices daily from FICC’s website. FICC would also add a provision to EPN Article V, Rule 16 to state that any notice from an Interested Person to FICC shall be sufficiently served on FICC if the notice is in writing and is delivered, mailed, or transmitted by facsimile machine to FICC at its principal place of business, Attention: Secretary, or such other place as FICC designates in order to be consistent with Section 2 of GSD Rule 45 and Section 2 of MBSD Rule 35. This new provision would also state that any such notice to FICC shall be deemed to have been given when received. D. Remove Certain Redundant or Unnecessary Provisions for Clarity FICC is proposing to remove the second paragraph in GSD Rule 2A, Section 3 that states that FICC shall retain the right to deny membership to an applicant if FICC becomes aware of any factor or circumstance about the applicant or its Controlling Management which may impact the suitability of that particular applicant as a Member of FICC because it is redundant. In addition, FICC proposes to remove ‘‘or any Committee thereof’’ from GSD Rule 47 and MBSD Rule 37 because it is redundant. In addition, FICC proposes to remove ‘‘, or any committee of the Board,’’ in EPN Article V, Rule 1 PO 00000 15 Id. Frm 00127 Fmt 4703 Sfmt 4703 because it is also redundant. The definition of ‘‘Board of Directors’’ currently includes committees. Furthermore, for simplicity and because it is unnecessary, FICC proposes to remove the word ‘‘all’’ before ‘‘EPN Users’’ in EPN Article V, Rule 10. E. Clarify the Provision Relating to a Special Charge in the GSD Rules The fourth paragraph in Section 1b(a) of GSD Rule 4 describes a special charge. FICC is proposing to revise the phrase ‘‘additional amount’’ to ‘‘additional payment’’ in this paragraph. To enhance transparency and clarity, FICC would also revise the provision to state that FICC may charge (and not just calculate) an additional payment (a ‘‘special charge’’) applicable to a Margin Portfolio as determined by FICC from time to time in view of market conditions and other financial and operational capabilities of the Member, and FICC would make any such determination based on such factors as FICC determines to be appropriate from time to time. This revised provision would be moved from the fourth paragraph to a new subsection (viii) in Section 1b(a) of GSD Rule 4 preceded by the word ‘‘plus.’’ F. Certain Clarifications and Corrections to GSD Rule 22C FICC is proposing to make certain clarifications to GSD Rule 22C which describes FICC’s interpretation in relation to the Federal Deposit Insurance Corporation Improvement Act of 1991 (‘‘FDICIA’’). FICC proposes to correct the title of GSD Rule 22C by adding the word ‘‘Improvement’’ after ‘‘Corporation.’’ FICC would revise ‘‘Netting Members’’ to ‘‘Members’’ in GSD Rule 22C to clarify that the transactions of Members other than Netting Members may be Novated to FICC. Such Members may therefore have net claims against FICC under the GSD Rules, and FICC may have net claims against such Members under the GSD Rules. In each such case, both the Members and FICC intend FDICIA’s clearing organization netting provisions to apply. In addition, FICC is proposing to add ‘‘or used’’ after ‘‘defined’’ in GSD Rule 22C to clarify that some terms discussed in GSD Rule 22C are used in FDICIA but either are not defined at all or not defined in FDICIA. FICC is also proposing to add ‘‘or delivery’’ in the third and fourth paragraph since the term ‘‘payment’’ as used in FDICIA includes a ‘‘noncash E:\FR\FM\13JYN1.SGM 13JYN1 Federal Register / Vol. 86, No. 131 / Tuesday, July 13, 2021 / Notices jbell on DSKJLSW7X2PROD with NOTICES payment,’’ 16 and it is FICC’s and each Member’s intent that both the cash payment and security delivery entitlements and obligations of FICC and each Member be subject to FDICIA’s clearing organization netting provisions. FICC is also proposing to add ‘‘and each Cross-Margining Arrangement and associated agreement and guaranty’’ in the last paragraph of GSD Rule 22C to clarify the intent of FICC and each Member that the Cross-Margining Arrangements and associated agreements and guaranties are within the scope of Section 404(h) of FDICIA and therefore subject to its protections for ‘‘any security agreement or arrangement or other credit enhancement related to one or more netting contracts’’ between clearing organization members. FICC would correct references to this Rule 22C. Specifically, FICC would revise references from ‘‘this Rule 22C’’ to ‘‘Rule 22B’’ because Rule 22B (not Rule 22C) provides for the exercise of netting and close-out rights that FICC and its Members intend to be within the scope of FDICIA’s protections. FICC is also proposing to remove the reference to GSD to reflect the fact that FICC, not GSD, is a ‘‘clearing organization’’ within the meaning of FDICIA. FICC would also revise the last sentence in GSD Rule 22C to clarify that the netting provided for under Rules 22A and 22B falls within the scope of the general netting protections of Section 404(a) of FDICIA. G. Other Clarifications and Corrections to the MBSD Rules To enhance transparency, FICC is proposing to clarify the defined term ‘‘Settlement Price’’ in MBSD Rule 1 to add a case that occurs in current practice. Specifically, FICC proposes to revise subsection (b) to add unallocated TBAs that go through the process for determining the TBA Reprice Transaction Adjustment Payment. FICC is also proposing correct the defined term ‘‘Settlement Value’’ in MBSD Rule 1 to reflect current practice by (i) removing the references to a Trade-for-Trade Transaction, an SBODestined Trade, a Stipulated Trade, and a SBON Trade because only Pool Deliver Obligations, Pool Receive Obligations, and Specified Pool Trades include interest, and (ii) adding a new paragraph for Trade-for-Trade Transactions, an SBO-Destined Trade, a Stipulated Trade, and an SBON Trade that would state that with respect to these types of trades, Settlement Value 16 See 12 U.S.C. 4402(15). VerDate Sep<11>2014 17:47 Jul 12, 2021 Jkt 253001 would mean the amount in dollars equal to the Par Amount of each Eligible Security that comprises these trades multiplied by the Settlement Price. FICC is also proposing to add ‘‘and SBON Trades’’ to the definition of ‘‘TBA Obligations’’ and remove ‘‘, with respect to’’ and ‘‘settlement obligations generated by the Trade Comparison System’’ in MSBD Rule 1 to correct an omission and reflect current practice. FICC would also clarify that the term settlement date in MSBD Rule 8, Section 2B refers to the SIFMA settlement date because the Expanded Pool Netting process only occurs four times a month (during the SIFMA settlement cycle). In addition, FICC is proposing to add the phrase ‘‘for purposes of this Rule 8, hereinafter referred to’’ before the defined term ‘‘ExP Day’’ in MSBD Rule 8, Section 2B to enhance clarity. FICC would also add the following cash-only settlement amounts ‘‘Miscellaneous Adjustment Amount from TBA Clearing (MIS),’’ ‘‘Miscellaneous Adjustment Amount from Pool Netting (MSC),’’ and ‘‘Miscellaneous Adjustment from EPN (MSE)’’ to MSBD Rule 11, Section 7. MSBD Rule 11, Section 7 describes the computation of the Cash Balance for each applicable account. Furthermore, FICC would add the defined term ‘‘Miscellaneous Adjustment Amount’’ to MSBD Rule 1, and such definition would be consistent with the definition for the same term in the GSD Rules. FICC is proposing to add ‘‘Date’’ after ‘‘Trade’’ under Processing Fees of Section I of the Broker Schedule of Charges and under Processing Fees of Section I of the Dealer Schedule of Charges to enhance clarity. H. Other Clarifications and Corrections to the EPN Rules To enhance clarity and to be consistent with GSD Rule 44 and MBSD Rule 34, FICC is proposing to revise EPN Article V, Rule 1. Currently, EPN Article V, Rule 1 states that except where action by the Board of Directors, or any committee of the Board, is specifically required by the By-Laws or the EPN Rules, FICC may act by its President, any Managing Director or any Executive Director or by such person, as may be designated from time to time by the Board of Directors. FICC proposes to revise EPN Article V, Rule 1 to state that where action by the Board of Directors is required by the EPN Rules, FICC may act, to the fullest extent permitted by law, by the Chairman of the Board, by its President, any Managing Director or any Executive Director or by such person or persons, whether or not employed by FICC, as may be PO 00000 Frm 00128 Fmt 4703 Sfmt 4703 36825 designated from time to time by the Board of Directors. FICC also proposes to correct EPN Article II, Rule 2, Section 3. Specifically, FICC proposes to revise that the Message Summary Report lists the summary totals of each message type by EPN Eligible Security and Participant. This report lists the summary totals of each message type (not list the contents of each message). FICC also proposes to clarify EPN Article III, Rule 1, Section 2 by removing subsection (a) because FICC does not review an applicant’s financial ability, and FICC does not collect financials for EPN Users. To enhance clarity, FICC proposes to revise the reference from ‘‘Greater than 10 accounts’’ to ‘‘11 Accounts and over’’ under the section entitled ‘‘Account Maintenance Fees’’ in the FICC MSBD EPN Schedule of Charges. (iii) Proposal To Make Certain Technical Changes in the Rules FICC is proposing to make the following technical changes in the Rules to enhance the clarity and readability of the Rules: A. Grammar-Related Technical Changes FICC is proposing to make certain grammar-related technical changes. FICC is proposing to make a conforming grammatical change in the final paragraph of GSD Rule 22C to change ‘‘relating’’ to ‘‘related.’’ FICC is also proposing to revise ‘‘payments’’ to ‘‘payment’’ as a conforming grammatical change in GSD Rule 22C. FICC would also remove the word ‘‘which’’ in GSD Rule 11B, Section (a) to make a grammatical correction. FICC would add the word ‘‘or’’ as a grammatical correction in the definition of ‘‘Settlement Value’’ in MSBD Rule 1. FICC is also proposing to make a conforming grammatical change to remove the comma in the definition of ‘‘TBA Obligations’’ in MBSD Rule 1. B. Correct Typographical Errors FICC is proposing to revise ‘‘An’’ to ‘‘Any’’ to correct a typographical error in the fourth paragraph of GSD Rule 22C. C. Other Technical Changes FICC is also proposing to make the technical changes described below. • conform the use of dashes in Section 2 of GSD Rule 38 and Section 2 of MBSD Rule 29. • revise the comma to a semi-colon in the last paragraph of GSD Rule 22C. • add a comma in the last sentence of GSD Rule 22C, in the defined term ‘‘Clearing System’’ in MBSD Rule 1. E:\FR\FM\13JYN1.SGM 13JYN1 36826 Federal Register / Vol. 86, No. 131 / Tuesday, July 13, 2021 / Notices • add a hyphen between ‘‘the’’ and ‘‘Market’’ in the defined term ‘‘Off-the Market Transaction’’ in MBSD Rule 1. • correct a section reference in MSBD Rule 11, Section 7(l) by revising the reference from Section 6 to Section 10. • make conforming changes to MBSD Rule 11, Section 7 to replace the comma with a semi-colon and add plus or minus after the items described in subsections (o), (p), and (q). • make a conforming change to EPN Article III, Rule 1, Section 2 by revising subsections (b) and (c) to subsections (a) and (b), respectively because FICC is proposing to remove subsection (a), as described above. 2. Statutory Basis Section 17A(b)(3)(F) of the Act requires, in part, that the Rules be designed to promote the prompt and accurate clearance and settlement of securities transactions.17 The proposed changes to (i) correct or clarify the use of certain defined terms in the Rules, (ii) make certain clarifications and corrections in the Rules, and (iii) make certain technical changes to the Rules would help to ensure that the Rules are accurate and clear to participants. When participants better understand their rights and obligations regarding the Rules, such participants are more likely to act in accordance with the Rules, which FICC believes would promote the prompt and accurate clearance and settlement of securities transactions. As such, FICC believes that the proposed changes would be consistent with Section 17A(b)(3)(F) of the Act.18 jbell on DSKJLSW7X2PROD with NOTICES (B) Clearing Agency’s Statement on Burden on Competition FICC does not believe the proposed rule changes to (i) correct or clarify the use of certain defined terms in the Rules, (ii) make certain clarifications and corrections in the Rules, and (iii) make certain technical changes to the Rules would impact competition. The proposed rule changes would help to ensure that the Rules remain clear and accurate. In addition, the changes would facilitate participants’ understanding of the Rules and their obligations thereunder. These changes would not affect FICC’s operations or the rights and obligations of the membership. As such, FICC believes the proposed rule changes would not have any impact on competition. 17 15 (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 The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) 19 of the Act and paragraph (f) 20 of Rule 19b–4 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– FICC–2021–005 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–2021–005. 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 U.S.C. 78q–1(b)(3)(F). 19 15 18 Id. VerDate Sep<11>2014 20 17 17:47 Jul 12, 2021 Jkt 253001 PO 00000 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). Frm 00129 Fmt 4703 Sfmt 4703 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-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– 2021–005 and should be submitted on or before August 3, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–14802 Filed 7–12–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–92333; File No. SR– NYSEArca–2021–37] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Designation of a Longer Period for Commission Action on a Proposed Rule Change To List and Trade Shares of the First Trust SkyBridge Bitcoin ETF Trust Under NYSE Arca Rule 8.201–E July 7, 2021. On May 6, 2021, NYSE Arca, Inc. (‘‘NYSE Arca’’) 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 shares of the First Trust SkyBridge Bitcoin ETF Trust under NYSE Arca Rule 8.201–E. The proposed rule change was published for comment in the Federal Register on May 27, 2021.3 The Commission has received 21 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 91962 (May 21, 2021), 86 FR 28646 (May 27, 2021). 1 15 E:\FR\FM\13JYN1.SGM 13JYN1

Agencies

[Federal Register Volume 86, Number 131 (Tuesday, July 13, 2021)]
[Notices]
[Pages 36822-36826]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-14802]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92340; File No. SR-FICC-2021-005]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Modify the FICC Government Securities Division Rulebook, FICC 
Mortgage-Backed Securities Division Clearing Rules, and FICC Mortgage-
Backed Securities Division EPN Rules

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 30, 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. 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\ 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 of FICC consists of modifications to the 
FICC Government Securities Division (``GSD'') Rulebook (``GSD Rules''), 
the FICC Mortgage-Backed Securities Division (``MBSD'') Clearing Rules 
(``MBSD Rules'') and the FICC MBSD EPN Rules (``EPN Rules,'' and 
together with the GSD Rules and the MBSD Rules, the ``Rules'') \5\ in 
order to (i)

[[Page 36823]]

correct or clarify the use of certain defined terms in the Rules, (ii) 
make certain clarifications and corrections in the Rules, and (iii) 
make certain technical changes to the Rules, each as described in more 
detail below.
---------------------------------------------------------------------------

    \5\ Capitalized terms used herein and not defined shall have the 
meanings assigned to such terms in the GSD Rules, MBSD Rules and EPN 
Rules, as applicable, available at https://www.dtcc.com/legal/rules-and-procedures.aspx.
---------------------------------------------------------------------------

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
    FICC is proposing to (i) correct the use of certain defined terms 
in the Rules, (ii) make certain clarifications and corrections in the 
Rules, and (iii) make certain technical changes to the Rules, each as 
described in more detail below.
(i) Proposal To Correct or Clarify the Use of Certain Defined Terms in 
the Rules
A. Proposal To Delete Terms That Are no Longer Used in the Rules
    FICC is proposing to remove the following defined terms and related 
descriptions, as applicable, in the Rules:
     ``GCF Securities Account'' in GSD Rule 1 and the phrase 
``and for which the Corporation establishes a GCF Securities Account'' 
in the defined term ``GCF Clearing Agent Bank'' in GSD Rule 1 because 
these provisions relate to the interbank service of the GCF Repo 
Service, which FICC does not expect to reinstitute.\6\
---------------------------------------------------------------------------

    \6\ In 2016, the Commission approved FICC's proposed rule change 
to suspend the interbank service of the GCF Repo Service. The GCF 
Repo Service has operated on both an ``interbank'' and ``intrabank'' 
basis. ``Interbank'' means that the two GCF Repo Participants, which 
have been matched in a GCF Repo transaction, each clear at a 
different clearing bank. See Securities Exchange Act Release No. 
78206 (June 30, 2016), 81 FR 44388 (July 7, 2016) (SR-FICC-2016-
002).
    ``Intrabank'' means that the two GCF Repo Participants, which 
have been matched in a GCF Repo transaction, clear at the same 
clearing bank. FICC does not expect to reinstitute the interbank 
service of the GCF Repo Service at this time and removed all 
references to this service from the GSD Rules in 2020. See 
Securities Exchange Act Release No. 88766 (April 29, 2020), 85 FR 
26747 (May 5, 2020) (SR-FICC-2020-005) (``FICC Clean-Up Changes 
Filing'').
---------------------------------------------------------------------------

     ``and Clearing Fund Funds-Only Settlement Amount'' in the 
defined term ``Opening Balance'' in GSD Rule 1 because ``Clearing Fund 
Funds-Only Settlement Amount'' is no longer a defined term in the GSD 
Rules.\7\
---------------------------------------------------------------------------

    \7\ Most of the references to the term ``Clearing Fund Funds-
Only Settlement Amount'' were deleted in the FICC Clean-Up Changes 
Filing because this is an outdated Clearing Fund component and 
should have been deleted when GSD moved to a VaR-based Clearing Fund 
methodology. See FICC Clean-up Changes Filing, supra note 6.
---------------------------------------------------------------------------

     the defined term ``Direct Transaction'' in MBSD Rule 1 
because this defined term is no longer used in the MBSD Rules (it was 
used in a previous version of the rules relating to loss allocation).
     the defined term ``Eligible Letter of Credit'' in MBSD 
Rule 1 because this defined term is no longer used in the MBSD Rules 
(it is no longer a required form of Clearing Fund).
     the defined term ``TBA Comparison'' from MBSD Rule 1 
because this defined term is not used in the MSBD Rules and is also 
duplicative (it has the same definition as the defined term ``Trade 
Comparison'').
     the defined term ``GCF Collateral Excess Account'' in MBSD 
Rule 1 because this is a typographical error and was inadvertently 
included in the MBSD Rules. GCF Collateral Excess Account is only 
relevant to the GSD Rules, not the MBSD Rules.
B. Proposal To Revise References To Reflect the Existing Defined Terms 
and Related Changes
    FICC is proposing to capitalize references to the following words 
to reflect the existing defined terms in their respective Rules:
     ``registered clearing agencies'' in GSD Rule 36 and EPN 
Article V, Rule 10
     ``clearing agency'' in EPN Article V, Rule 14
    As described above, because FICC is proposing to capitalize the 
references to registered clearing agencies and clearing agencies in the 
EPN Rules in order to be consistent with the GSD Rules and MSBD Rules, 
FICC is also proposing to add the defined terms ``Registered Clearing 
Agency'' and ``Clearing Agency to EPN Article I, Rule 1 to enhance 
clarity.
    FICC is also proposing to revise ``Securities and Exchange 
Commission'' to ``SEC'' in GSD Rule 36 to reflect the existing defined 
term.
    In addition, FICC is proposing to add ``EPN'' before the references 
to ``Rules'' in EPN Article V, Rule 10 to reflect the existing defined 
term.
C. Proposal To Revise Capitalized Terms To Reflect That They Are Not 
Defined Terms
    FICC is proposing to revise the references from ``Website'' to 
``website'' in Section 2 of GSD Rule 3 because ``Website'' is not a 
defined term.
(ii) Proposal To Make Certain Clarifications and Corrections in the 
Rules
A. Remove Certain Categories Where There Is no Charge
    Certain categories are included in the FICC MSBD Schedule of 
Charges Broker Account Group (``Broker Schedule of Charges'') and the 
FICC MSBD Schedule of Charges Dealer Account Group (``Dealer Schedule 
of Charges'') of the MBSD Rules and the FICC MSBD EPN Schedule of 
Charges in the EPN Rules even though there are no charges associated 
with those categories.
    As such, for simplicity and to enhance clarity, FICC is proposing 
to remove the category entitled ``DK and Modify'' from the subsection 
entitled ``Trade Processing'' under Section 1 of the Broker Schedule of 
Charges of the MBSD Rules.
    FICC is also proposing to remove the category entitled ``DK and 
Modify'' from the subsections entitled (a) ``Trade Processing,'' (b) 
``Trade-for-Trade Transactions, Specified Pool Trades, and Stipulated 
Trades,'' and (c) ``Option Trades'' under Section I of the Dealer 
Schedule of Charges of the MBSD Rules.
    In addition, FICC is also proposing to remove certain categories 
from the sections entitled ``Message Processing Fees'' and ``Pool 
Substitution Cancel/Correct'' in the FICC MSBD EPN Schedule of Charges. 
Specifically, FICC proposes to remove the following categories:
     ``DK Send or Receive:''
     ``Cancel Send or Receive:''
     ``Retransmission Request:''
     ``Cancel/Correct Receive:''
     ``Cancel/Correct DK Send or Receive:''
     ``Cancel/Correct Retransmission Request:''
B. Clarify the Rules Related to Notification of Rule Changes
    In order to be consistent with similar provisions in the GSD Rules 
and the EPN Rules and to enhance clarity, FICC is also proposing to add 
``and Registered Clearing Agencies'' to MBSD Rule 27. FICC believes 
this proposed change would clarify that FICC shall promptly notify 
Registered Clearing Agencies in addition to Members of any proposal to 
change, revise, add, or repeal any Rule.
    In addition, currently, GSD Rule 36 states that FICC would notify 
all

[[Page 36824]]

Members and registered clearing agencies of any rule change proposals, 
and MBSD Rule 27 states that FICC would notify all Members of any rule 
change proposals. Similarly, EPN Article V, Rule 10 states that FICC 
would notify all EPN Users and registered clearing agencies of any rule 
change proposals by posting the proposal on the FICC website.
    As a clearing agency registered with the Commission, the Act 
provides a clear framework under which FICC's Rules are adopted and 
enforced. Under the rule change process, generally, before a proposed 
rule change may take effect, (i) the change and an explanatory 
statement must be filed with the Commission and posted by FICC on the 
FICC website, (ii) notice of the filing and the substantive terms or 
description of the change must be published by the Commission in the 
Federal Register for public review and comment, and (iii) the 
Commission must approve the change (or the change must otherwise be 
permitted to take effect). FICC's Rules are filed with and reviewed by 
the Commission. As a clearing agency registered under Section 17A of 
the Act,\8\ a self-regulatory organization subject to Section 19 of the 
Act,\9\ and a systemically important financial market utility under 
Title VIII of Dodd-Frank Wall Street Reform and Consumer Protection Act 
of 2010 (``Dodd-Frank''),\10\ FICC is required to follow: (1) A 
specified process \11\ whenever it proposes a new rule or a change or 
amendment to its Rules and (2) a specified process \12\ whenever it 
proposes to make a change to its rules, procedures or operations that 
could materially affect the nature or level of risks presented by FICC.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78q-1.
    \9\ 15 U.S.C. 78s.
    \10\ 12 U.S.C. 5465(e)(1).
    \11\ This process is set forth in Section 19(b) of the Act and 
Rule 19b-4 thereunder. 15 U.S.C. 78s(b) and 17 CFR 240.19b-4.
    \12\ This process is set forth in Section 806(e) of Dodd-Frank 
and Rule 19b-4 thereunder. 12 U.S.C. 5465(e) and 17 CFR 240.19b-4.
---------------------------------------------------------------------------

    These rule change processes provide notice to Members and provide 
an opportunity for those parties to comment on such changes. Rule 19b-4 
under the Act requires that FICC post any rule change proposals on its 
website within two business days after the filing of a proposed rule 
change,\13\ post any rule changes that are approved by the Commission 
within two business days after it has been notified of the Commission's 
approval \14\ and post any rule change within two business days of the 
Commission's notice of such proposed change for rule changes that are 
effective upon filing.\15\ FICC complies--and will continue to comply--
with such notice requirements which it believes are adequate.
---------------------------------------------------------------------------

    \13\ 17 CFR 240.19b-4(l).
    \14\ 17 CFR 240.19b-4(m)(2).
    \15\ Id.
---------------------------------------------------------------------------

C. Clarify Certain Provisions Regarding Notice to Interested Persons in 
the Rules
    FICC is proposing to revise certain provisions regarding notice to 
Interested Persons in GSD Rule 45, MBSD Rule 35 and EPN Article V, Rule 
16. Specifically, in the second paragraph of Section 1 of GSD Rule 45, 
second paragraph of MSBD Rule 35, and EPN Article V, Rule 16, FICC 
proposes to revise ``delivered'' to ``sufficiently served,'' so the 
provision would state that FICC would deem a notice sufficiently served 
once such notice is posted to the website to be consistent with the 
other provisions in the first paragraph of Section 1 and Section 2 of 
GSD Rule 45, the first paragraph of Section 1 and Section 2 of MBSD 
Rule 35, and the first paragraph of EPN Article V, Rule 16.
    FICC would also revise GSD Rule 45, MBSD Rule 35, and EPN Article 
V, Rule 16 to state that it is the responsibility of the Interested 
Persons to retrieve notices daily from FICC's website.
    FICC would also add a provision to EPN Article V, Rule 16 to state 
that any notice from an Interested Person to FICC shall be sufficiently 
served on FICC if the notice is in writing and is delivered, mailed, or 
transmitted by facsimile machine to FICC at its principal place of 
business, Attention: Secretary, or such other place as FICC designates 
in order to be consistent with Section 2 of GSD Rule 45 and Section 2 
of MBSD Rule 35. This new provision would also state that any such 
notice to FICC shall be deemed to have been given when received.
D. Remove Certain Redundant or Unnecessary Provisions for Clarity
    FICC is proposing to remove the second paragraph in GSD Rule 2A, 
Section 3 that states that FICC shall retain the right to deny 
membership to an applicant if FICC becomes aware of any factor or 
circumstance about the applicant or its Controlling Management which 
may impact the suitability of that particular applicant as a Member of 
FICC because it is redundant.
    In addition, FICC proposes to remove ``or any Committee thereof'' 
from GSD Rule 47 and MBSD Rule 37 because it is redundant. In addition, 
FICC proposes to remove ``, or any committee of the Board,'' in EPN 
Article V, Rule 1 because it is also redundant. The definition of 
``Board of Directors'' currently includes committees.
    Furthermore, for simplicity and because it is unnecessary, FICC 
proposes to remove the word ``all'' before ``EPN Users'' in EPN Article 
V, Rule 10.
E. Clarify the Provision Relating to a Special Charge in the GSD Rules
    The fourth paragraph in Section 1b(a) of GSD Rule 4 describes a 
special charge. FICC is proposing to revise the phrase ``additional 
amount'' to ``additional payment'' in this paragraph. To enhance 
transparency and clarity, FICC would also revise the provision to state 
that FICC may charge (and not just calculate) an additional payment (a 
``special charge'') applicable to a Margin Portfolio as determined by 
FICC from time to time in view of market conditions and other financial 
and operational capabilities of the Member, and FICC would make any 
such determination based on such factors as FICC determines to be 
appropriate from time to time. This revised provision would be moved 
from the fourth paragraph to a new subsection (viii) in Section 1b(a) 
of GSD Rule 4 preceded by the word ``plus.''
F. Certain Clarifications and Corrections to GSD Rule 22C
    FICC is proposing to make certain clarifications to GSD Rule 22C 
which describes FICC's interpretation in relation to the Federal 
Deposit Insurance Corporation Improvement Act of 1991 (``FDICIA'').
    FICC proposes to correct the title of GSD Rule 22C by adding the 
word ``Improvement'' after ``Corporation.''
    FICC would revise ``Netting Members'' to ``Members'' in GSD Rule 
22C to clarify that the transactions of Members other than Netting 
Members may be Novated to FICC. Such Members may therefore have net 
claims against FICC under the GSD Rules, and FICC may have net claims 
against such Members under the GSD Rules. In each such case, both the 
Members and FICC intend FDICIA's clearing organization netting 
provisions to apply.
    In addition, FICC is proposing to add ``or used'' after ``defined'' 
in GSD Rule 22C to clarify that some terms discussed in GSD Rule 22C 
are used in FDICIA but either are not defined at all or not defined in 
FDICIA.
    FICC is also proposing to add ``or delivery'' in the third and 
fourth paragraph since the term ``payment'' as used in FDICIA includes 
a ``noncash

[[Page 36825]]

payment,'' \16\ and it is FICC's and each Member's intent that both the 
cash payment and security delivery entitlements and obligations of FICC 
and each Member be subject to FDICIA's clearing organization netting 
provisions.
---------------------------------------------------------------------------

    \16\ See 12 U.S.C. 4402(15).
---------------------------------------------------------------------------

    FICC is also proposing to add ``and each Cross-Margining 
Arrangement and associated agreement and guaranty'' in the last 
paragraph of GSD Rule 22C to clarify the intent of FICC and each Member 
that the Cross-Margining Arrangements and associated agreements and 
guaranties are within the scope of Section 404(h) of FDICIA and 
therefore subject to its protections for ``any security agreement or 
arrangement or other credit enhancement related to one or more netting 
contracts'' between clearing organization members.
    FICC would correct references to this Rule 22C. Specifically, FICC 
would revise references from ``this Rule 22C'' to ``Rule 22B'' because 
Rule 22B (not Rule 22C) provides for the exercise of netting and close-
out rights that FICC and its Members intend to be within the scope of 
FDICIA's protections.
    FICC is also proposing to remove the reference to GSD to reflect 
the fact that FICC, not GSD, is a ``clearing organization'' within the 
meaning of FDICIA.
    FICC would also revise the last sentence in GSD Rule 22C to clarify 
that the netting provided for under Rules 22A and 22B falls within the 
scope of the general netting protections of Section 404(a) of FDICIA.
G. Other Clarifications and Corrections to the MBSD Rules
    To enhance transparency, FICC is proposing to clarify the defined 
term ``Settlement Price'' in MBSD Rule 1 to add a case that occurs in 
current practice. Specifically, FICC proposes to revise subsection (b) 
to add unallocated TBAs that go through the process for determining the 
TBA Reprice Transaction Adjustment Payment.
    FICC is also proposing correct the defined term ``Settlement 
Value'' in MBSD Rule 1 to reflect current practice by (i) removing the 
references to a Trade-for-Trade Transaction, an SBO-Destined Trade, a 
Stipulated Trade, and a SBON Trade because only Pool Deliver 
Obligations, Pool Receive Obligations, and Specified Pool Trades 
include interest, and (ii) adding a new paragraph for Trade-for-Trade 
Transactions, an SBO-Destined Trade, a Stipulated Trade, and an SBON 
Trade that would state that with respect to these types of trades, 
Settlement Value would mean the amount in dollars equal to the Par 
Amount of each Eligible Security that comprises these trades multiplied 
by the Settlement Price.
    FICC is also proposing to add ``and SBON Trades'' to the definition 
of ``TBA Obligations'' and remove ``, with respect to'' and 
``settlement obligations generated by the Trade Comparison System'' in 
MSBD Rule 1 to correct an omission and reflect current practice.
    FICC would also clarify that the term settlement date in MSBD Rule 
8, Section 2B refers to the SIFMA settlement date because the Expanded 
Pool Netting process only occurs four times a month (during the SIFMA 
settlement cycle).
    In addition, FICC is proposing to add the phrase ``for purposes of 
this Rule 8, hereinafter referred to'' before the defined term ``ExP 
Day'' in MSBD Rule 8, Section 2B to enhance clarity.
    FICC would also add the following cash-only settlement amounts 
``Miscellaneous Adjustment Amount from TBA Clearing (MIS),'' 
``Miscellaneous Adjustment Amount from Pool Netting (MSC),'' and 
``Miscellaneous Adjustment from EPN (MSE)'' to MSBD Rule 11, Section 7. 
MSBD Rule 11, Section 7 describes the computation of the Cash Balance 
for each applicable account. Furthermore, FICC would add the defined 
term ``Miscellaneous Adjustment Amount'' to MSBD Rule 1, and such 
definition would be consistent with the definition for the same term in 
the GSD Rules.
    FICC is proposing to add ``Date'' after ``Trade'' under Processing 
Fees of Section I of the Broker Schedule of Charges and under 
Processing Fees of Section I of the Dealer Schedule of Charges to 
enhance clarity.
H. Other Clarifications and Corrections to the EPN Rules
    To enhance clarity and to be consistent with GSD Rule 44 and MBSD 
Rule 34, FICC is proposing to revise EPN Article V, Rule 1. Currently, 
EPN Article V, Rule 1 states that except where action by the Board of 
Directors, or any committee of the Board, is specifically required by 
the By-Laws or the EPN Rules, FICC may act by its President, any 
Managing Director or any Executive Director or by such person, as may 
be designated from time to time by the Board of Directors. FICC 
proposes to revise EPN Article V, Rule 1 to state that where action by 
the Board of Directors is required by the EPN Rules, FICC may act, to 
the fullest extent permitted by law, by the Chairman of the Board, by 
its President, any Managing Director or any Executive Director or by 
such person or persons, whether or not employed by FICC, as may be 
designated from time to time by the Board of Directors.
    FICC also proposes to correct EPN Article II, Rule 2, Section 3. 
Specifically, FICC proposes to revise that the Message Summary Report 
lists the summary totals of each message type by EPN Eligible Security 
and Participant. This report lists the summary totals of each message 
type (not list the contents of each message).
    FICC also proposes to clarify EPN Article III, Rule 1, Section 2 by 
removing subsection (a) because FICC does not review an applicant's 
financial ability, and FICC does not collect financials for EPN Users.
    To enhance clarity, FICC proposes to revise the reference from 
``Greater than 10 accounts'' to ``11 Accounts and over'' under the 
section entitled ``Account Maintenance Fees'' in the FICC MSBD EPN 
Schedule of Charges.
(iii) Proposal To Make Certain Technical Changes in the Rules
    FICC is proposing to make the following technical changes in the 
Rules to enhance the clarity and readability of the Rules:
A. Grammar-Related Technical Changes
    FICC is proposing to make certain grammar-related technical 
changes. FICC is proposing to make a conforming grammatical change in 
the final paragraph of GSD Rule 22C to change ``relating'' to 
``related.'' FICC is also proposing to revise ``payments'' to 
``payment'' as a conforming grammatical change in GSD Rule 22C. FICC 
would also remove the word ``which'' in GSD Rule 11B, Section (a) to 
make a grammatical correction. FICC would add the word ``or'' as a 
grammatical correction in the definition of ``Settlement Value'' in 
MSBD Rule 1. FICC is also proposing to make a conforming grammatical 
change to remove the comma in the definition of ``TBA Obligations'' in 
MBSD Rule 1.
B. Correct Typographical Errors
    FICC is proposing to revise ``An'' to ``Any'' to correct a 
typographical error in the fourth paragraph of GSD Rule 22C.
C. Other Technical Changes
    FICC is also proposing to make the technical changes described 
below.
     conform the use of dashes in Section 2 of GSD Rule 38 and 
Section 2 of MBSD Rule 29.
     revise the comma to a semi-colon in the last paragraph of 
GSD Rule 22C.
     add a comma in the last sentence of GSD Rule 22C, in the 
defined term ``Clearing System'' in MBSD Rule 1.

[[Page 36826]]

     add a hyphen between ``the'' and ``Market'' in the defined 
term ``Off-the Market Transaction'' in MBSD Rule 1.
     correct a section reference in MSBD Rule 11, Section 7(l) 
by revising the reference from Section 6 to Section 10.
     make conforming changes to MBSD Rule 11, Section 7 to 
replace the comma with a semi-colon and add plus or minus after the 
items described in subsections (o), (p), and (q).
     make a conforming change to EPN Article III, Rule 1, 
Section 2 by revising subsections (b) and (c) to subsections (a) and 
(b), respectively because FICC is proposing to remove subsection (a), 
as described above.
2. Statutory Basis
    Section 17A(b)(3)(F) of the Act requires, in part, that the Rules 
be designed to promote the prompt and accurate clearance and settlement 
of securities transactions.\17\
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    The proposed changes to (i) correct or clarify the use of certain 
defined terms in the Rules, (ii) make certain clarifications and 
corrections in the Rules, and (iii) make certain technical changes to 
the Rules would help to ensure that the Rules are accurate and clear to 
participants. When participants better understand their rights and 
obligations regarding the Rules, such participants are more likely to 
act in accordance with the Rules, which FICC believes would promote the 
prompt and accurate clearance and settlement of securities 
transactions. As such, FICC believes that the proposed changes would be 
consistent with Section 17A(b)(3)(F) of the Act.\18\
---------------------------------------------------------------------------

    \18\ Id.
---------------------------------------------------------------------------

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

    FICC does not believe the proposed rule changes to (i) correct or 
clarify the use of certain defined terms in the Rules, (ii) make 
certain clarifications and corrections in the Rules, and (iii) make 
certain technical changes to the Rules would impact competition. The 
proposed rule changes would help to ensure that the Rules remain clear 
and accurate. In addition, the changes would facilitate participants' 
understanding of the Rules and their obligations thereunder. These 
changes would not affect FICC's operations or the rights and 
obligations of the membership. As such, FICC believes the proposed rule 
changes would not have any impact on competition.

(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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) \19\ of the Act and paragraph (f) \20\ of Rule 19b-4 
thereunder. 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-2021-005 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-2021-005. 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-2021-005 and should be submitted on 
or before August 3, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-14802 Filed 7-12-21; 8:45 am]
BILLING CODE 8011-01-P
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