[Federal Register Volume 68, Number 62 (Tuesday, April 1, 2003)]
[Notices]
[Pages 15781-15782]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-7758]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47569; File No. SR-FICC-2002-13]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to FICC's Schedule of Money Tolerances

March 26, 2003.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on December 20, 2002, the 
Fixed Income Clearing Corporation (``FICC'') filed with the Securities 
and Exchange Commission (``Commission'') the proposed rule change as 
described in Items I, II, and III below, which items have been prepared 
primarily by FICC. 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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change amends the schedule of money tolerances 
set forth in the rules of the Government Securities Division of FICC.

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

    In its filing with the Commission, FICC included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. FICC has prepared summaries, set forth in sections (A), 
(B), and (C) below, of the most significant aspects of such 
statements.\2\
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    \2\ The Commission has modified parts of these statements.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The rules of the Government Securities Division of FICC contain a 
schedule of money tolerances (``Schedule'') that permits FICC, among 
other things, to compare a buy-sell trade with a discrepancy in its 
settlement amount of $1 per million in real time.\3\ FICC is proposing 
to amend this tolerance to $2 per million in order to increase the 
intraday comparison rate of valid trades.
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    \3\ Money tolerances are calculated based on the par amount of 
the securities. GSCC, FICC's predecessor, recently amended the real-
time money tolerance applicable to the statement amount of repo 
transactions from $1 to $0.10. Securities Exchange act Release No. 
46658 (October 11, 2002) 67 FR 64943 [SR-GSCC-2002-08]. In making 
that rule filing, GSCC inadvertently eliminated the text that was 
applicable to the real-time tolerance for the settlement money of 
buy-sell transactions, which is the subject of this present rule 
filing. This present rule filing therefore reinstates the necessary 
language to cover the real time tolerance applicable to buy-sell 
transactions and distinguishes it from the language applicable to 
repo transactions.
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    FICC has found that the current $1 tolerance on the settlement 
amount of buy-sell transactions results in increased risk. 
Specifically, FICC has found after conducting an analysis that many 
valid trades remain uncompared during the day and thus do not receive 
the benefit of FICC's guaranty. These trades eventually compare at end 
of day, when the applicable tolerance is higher, but they are left 
without the FICC guaranty during the day. FICC's analysis has shown 
that increasing the real-time money tolerance to $2 per million would 
cause more than 1,000 additional trades to compare earlier in the day. 
FICC is thus proposing to amend the Schedule to provide for a $2 real-
time tolerance per million for buy-sell transactions.
    FICC believes the proposed rule change is consistent with the Act 
and the rules and regulations thereunder because it will permit valid 
trades to compare earlier in the day and thus will eliminate risk and 
will promote the prompt and accurate clearance and settlement of 
securities.

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

    FICC does not believe that the proposed rule change would have an 
impact on or impose a burden on competition.

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

    Written comments relating to the proposed rule change have not yet 
been solicited nor received. FICC will notify the Commission of any 
written comments received by FICC.

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

    The foregoing rule change has become effective pursuant to section 
19(b)(3)(A)(iii) of the Act \4\ and Rule 19b-4(f)(4) \5\ thereunder 
because it

[[Page 15782]]

effects a change in an existing service of OCC that (i) does not 
adversely affect the safeguarding of securities or funds in the custody 
or control of OCC or for which it is responsible and (ii) does not 
significantly affect the respective rights or obligations of OCC or 
persons using the service. At any time within sixty days of the filing 
of the proposed rule change, the Commission may summarily abrogate 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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    \4\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \5\ 17 CFR 240.19b-(f)(4).
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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. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street NW., Washington, DC 20549-0609. 
Comments may also be submitted electronically at the following e-mail 
address: [email protected]. All comment letters should refer to 
File No. SR-FICC-2002-13. This file number should be included on the 
subject line if e-mail is used. To help us process and review comments 
more efficiently, comments should be sent in hardcopy or by e-mail but 
not by both methods. 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 inspection and copying in the Commission's Public 
Reference Section, 450 Fifth Street NW., Washington, DC 20549. Copies 
of such filing will also be available for inspection and copying at the 
principal office of FICC. All submissions should refer to the File No. 
SR-FICC-2002-13 and should be submitted by April 22, 2003.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-7758 Filed 3-31-03; 8:45 am]
BILLING CODE 8010-01-P