[Federal Register Volume 69, Number 238 (Monday, December 13, 2004)]
[Notices]
[Pages 72237-72238]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-3609]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50806; File No. SR-FICC-2004-21]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change to Amend the Fee Structure of the 
Government Securities Division of the Fixed Income Clearing Corporation

December 7, 2004.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on November 9, 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 amendments to the fee 
structure of the Government Securities Division (``GSD'') of FICC to 
reflect a new pricing methodology for GSD's netting services.

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 purpose of the proposed rule change is to amend the fee 
structure of the GSD of FICC to reflect a new pricing methodology for 
GSD's netting services. The new methodology was established in 
recognition of the evolution of the government securities marketplace 
and the growth of electronic trading which have resulted in the GSD 
processing more high-volume/low-dollar trades with fewer residual 
positions to settle. FICC believes that the revised fee structure more 
accurately aligns the costs of FICC's services with its risk exposure. 
The changes will go into effect on January 1, 2005.
    Under the new methodology, netting fees will be calculated based on 
three components. These components consist of a fixed charge similar to 
today's fee and two new variable fees that will give FICC the ability 
to distinguish between smaller and larger ticket values and their 
associated risk, as well as capture the cost of FICC's settlement 
infrastructure and risk exposure associated with the post-netting 
positions requiring settlement.
    The new netting fee calculation will be based on the following 
charges:
    (1) A reduced fixed charge of $0.43 per ticket for trades entering 
the netting process (the current charge is $1.00);
    (2) A new charge of $0.012 per $1 million of par value for trades 
entering the netting process; and
    (3) A new charge of $0.052 per $1 million of par value for 
clearance obligations created as a result of the netting process.
    In addition, effective January 1, 2005, the fixed clearance charge 
will be reduced from the current $2.75 per obligation created to $2.35 
per obligation created in order to better align clearance revenues with 
associated expenses. The applicable charge for comparison services 
remains unchanged.
    FICC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \3\ and the rules and 
regulations thereunder applicable to FICC because the proposed change 
provides for fees that more accurately reflect FICC's costs and risks 
presented by trades submitted to FICC.
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    \3\ 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 \4\ and Rule 19b-4(f)(2) \5\ 
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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    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ 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-2004-21 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-2004-21. This 
file number should be included on the subject line if e-mail 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent

[[Page 72238]]

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. 
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-2004-21 
and should be submitted on or before January 3, 2005.

    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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Jill M. Petersen,
Assistant Secretary.
 [FR Doc. E4-3609 Filed 12-10-04; 8:45 am]
BILLING CODE 8010-01-P