[Federal Register Volume 70, Number 23 (Friday, February 4, 2005)]
[Notices]
[Pages 6059-6060]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-430]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51095; File No. SR-FICC-2005-04]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Clarify Timing of Premium Assessment Pursuant to Rule 3 of the 
Government Securities Division for Violation of Minimum Financial 
Standards

January 28, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on January 25, 2005, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The purpose of the proposed rule change is to clarify that the 
premium to be assessed pursuant to Rule 3 of the Government Securities 
Division (``GSD'') for violation of minimum financial standards will 
begin to be assessed on the date FICC becomes aware of the violation.

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\
---------------------------------------------------------------------------

    \2\ The Commission has modified the text of the summaries 
prepared by FICC.
---------------------------------------------------------------------------

(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    Recently, the Commission approved a proposed rule change by FICC to 
amend Rule 3 of the GSD to modify the penalty assessment process for 
violations of minimum financial standards.\3\ Pursuant to a provision 
under GSD Rule 3, which is scheduled to become effective on January 31, 
2005,\4\ a violation of a minimum financial standard by certain netting 
members will result in the imposition of a clearing fund premium which 
will continue for ninety calendar days after the later of (i) the 
member's return to compliance with applicable minimum financial 
standards or (ii) FICC's discovery of the violation. The purpose of 
this proposed rule change is to clarify that the required clearing fund 
deposit premium that will be assessed pursuant to Rule 3 of the GSD for 
violation of minimum financial standards will be effective beginning on 
the day of the violation but will begin to be assessed on the date FICC 
becomes aware of the violation.
---------------------------------------------------------------------------

    \3\ Securities Exchange Act Release No. 50659 (November 15, 
2004), 69 FR 67767 (November 19, 2004) [File No. SR-FICC-2004-11].
    \4\ This effective date was announced to the GSD's members in 
Important Notice GOV.156.04 (November 22, 2004) which is available 
on FICC's Web site at http://www.ficc.com.
---------------------------------------------------------------------------

    The proposed rule change is consistent with the requirements of 
Section 17A of the Act \5\ and the rules and regulations thereunder 
applicable to FICC because it assures the safeguarding of securities 
and funds which are in the custody or control of FICC by encouraging 
participants to maintain their minimum financial standards and to 
submit their required financial reports on a timely basis. As a result, 
FICC's ability to maintain a financially sound participant base should 
be enhanced.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------

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

    FICC does not believe that the proposed rule change will have any 
impact on 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

    No 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)(i) of the Act \6\ and Rule 19b-4(f)(1) \7\ 
thereunder because the proposed rule constitutes an interpretation with 
respect to the meaning, administration, or enforcement of an existing 
rule. 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.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78s(b)(3)(A)(i).
    \7\ 17 CFR 240.19b-4(f)(1).
---------------------------------------------------------------------------

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-2005-04 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-2005-04. This 
file

[[Page 6060]]

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 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-2005-04 and should be submitted on 
or before February 25, 2005.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
 [FR Doc. E5-430 Filed 2-3-05; 8:45 am]
BILLING CODE 8010-01-P