[Federal Register Volume 69, Number 235 (Wednesday, December 8, 2004)]
[Notices]
[Pages 71086-71087]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-3533]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50784; File No. SR-FICC-2004-20]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Implementation of a Fee for Financing Debits Associated 
With Certain Obligations of Repo Brokers

December 2, 2004.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on October 25, 2004, the 
Fixed Income Clearing Corporation (``FICC'') filed with the Securities 
and Exchange Commission (``Commission'') the proposed rule change 
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 parties.
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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 consists of implementing a fee where FICC 
finances debits associated with certain obligations of repo brokers.

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 these 
statements.\2\
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    \2\ The Commission has modified the text of the summaries 
prepared by FICC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The Commission recently approved FICC rule filing SR-FICC-2003-06 
\3\ that amended the rules of the Government Securities Division 
(``GSD'') of FICC with respect to forward margin obligations of repo 
brokers. Pursuant to FICC-2003-06, forward margin debits and credits up 
to a predetermined dollar amount ``cap'' will become automatically 
collected or paid (as applicable) by the repo brokers, as is the case 
for all other netting members. Debits and credits in excess of the cap 
will become subject to hybrid processing whereby the dollar amount up 
to the cap would always be collected or paid in its entirety by the 
broker and amounts over the cap would be financed by GSD at the 
discretion of FICC.
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    \3\ Securities Exchange Act Release No. 50389 (September 15, 
2004), 69 FR 56810.
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    Specifically with respect to forward margin debits in excess of the 
cap, if a repo broker is unable to pay its ``excess debit,'' the FICC 
Operations Department, in consultation with the Credit Risk Department 
will determine whether it would be appropriate for FICC to finance such 
an amount. If FICC finances an excess debit, the broker will be charged 
two fees: (1) A financing fee representing the interest amount that 
FICC would be charged by the clearing bank and (2) an administrative 
fee designed to cover FICC's associated costs of obtaining the 
financing.
    Pursuant to the Commission's order approving FICC-2003-06, the 
administrative fee must be the subject of a rule filing. Due to the 
close interrelation between the administrative fee and the other 
provisions of FICC-2003-06, FICC has delayed the implementation of the 
approved provisions in their entirety until it established the fee. 
Accordingly, FICC is hereby proposing for immediate effectiveness an 
administrative fee of $50 per financing to be charged to affected 
brokers. This administrative fee, along with the previously approved 
provisions of FICC-2003-06, will be implemented by year-end with the 
implementation date being announced to members through an important 
notice.
    FICC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \4\ and the rules and 
regulations thereunder applicable to FICC because it establishes a 
reasonable fee to cover administrative costs.
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    \4\ 15 U.S.C. 78q-1.
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    FICC does not believe that the proposed rule change will have an 
impact or impose any 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 been 
solicited or received. FICC will notify the Commission of any written 
comments received by FICC.

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

    The foregoing rule change has become effective upon filing pursuant 
to Section 19(b)(3)(A)(ii) of the Act \5\ and Rule 19b-4(f)(2) \6\ 
thereunder because the proposed rule establishes or changes a due, fee, 
or other charge. At any time within sixty days of the filing of such 
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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    \5\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \6\ 17 CFR 240.19b-4(f)(2).
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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 (http://www.sec.gov/rules/sro.shtml) or
     Send an e-mail to [email protected]. Please include 
File Number SR-FICC-2004-20 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-FICC-2004-20. This 
file number should be included on the subject line if e-mail is used. 
To help the

[[Page 71087]]

Commission process and review your comments more efficiently, please 
use only one method. The Commission will post all comments on the 
Commission's Internet Web site (http://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 inspection and copying in the 
Commission's Public Reference Section, 450 Fifth Street, NW., 
Washington, DC 20549. Copies of such filing also will be available for 
inspection and copying at the principal office of FICC and on FICC's 
Web site at http://www.FICC.com/legal. All comments received will be 
posted without change; the Commission does not edit personal 
identifying information from submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-FICC-2004-20 and should be submitted on 
or before December 29, 2004.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
 [FR Doc. E4-3533 Filed 12-7-04; 8:45 am]
BILLING CODE 8010-01-P