[Federal Register Volume 70, Number 31 (Wednesday, February 16, 2005)]
[Notices]
[Pages 7983-7984]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-639]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51175; File No. SR-FICC-2004-19]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Order Approving a Proposed Rule Change Relating to Changes To Eliminate 
or Amend Rules That Are Inconsistent With Current Practice, Have 
Expired, Are Outdated, Are Unnecessary, or Require Technical Correction

February 9, 2005.
SUMMARY: On October 7, 2004, the Fixed Income Clearing Corporation 
(``FICC'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act'') \1\ (File No. SR-FICC-
2004-19). Notice of the proposal was published in the Federal Register 
on December 29, 2004.\2\ No comment letters were received. For the 
reasons discussed below, the Commission is approving the proposed rule 
change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 50888 (Dec. 20, 2004), 
69 FR 78073.
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I. Description

    The proposed rule change will eliminate or amend FICC's Government 
Securities Division (``GSD'') and Mortgage-Backed Securities Division 
(``MBSD'') rules in the following manner:

1. Delete Provisions in GSD's Rules Regarding the Automated Customer 
Account Transfer Service (``ACATS'')

    The ACATS provisions were added to GSD's rules in 1998, when the 
National Securities Clearing Corporation requested that the Government 
Securities Clearing Corpoartion (``GSCC''), the GSD's predecessor, 
establish with it an interface that would enable account transfers 
involving netting-eligible government securities to be processed using 
GSCC's existing netting and settlement processes. This service was 
never implemented, and its continued reference in the rules is 
inconsistent with current practice.

2. Delete Provisions From GSD's Rules That Designate Participation in 
the Repo Comparison and Netting Processes

    GSD's rules used to refer to FICC as designating a member to be 
eligible to participate in the repo comparison and repo netting 
processes. When these repo services commenced in 1995, GSCC required 
testing prior to participation and subsequently designated members as 
eligible to participate in the services. Participation in these 
services has now become commonplace and special testing and designation 
for participation in the repo services is no longer necessary. As such, 
the provisions in question are outdated and are being deleted.

3. Make Technical Corrections to GSD Rules By

    i. Changing the definitions of ``Interest Adjustment Payment'' and 
``Interest Rate Mark Adjustment Payment'' in GSD Rule 1 (Definitions) 
to correct an erroneous reference in both definitions to the ``Federal 
Funds Rate'' and replacing them with references to a newly defined 
term, ``Overnight Investment Rate;''
    ii. changing the term in Rule 1 ``Multilateral Clearing 
Organization'' to ``Multilateral Clearing Agency;''
    iii. changing the language of the definition in Rule 1 of 
``Member'' to reflect the fact that certain members (i.e., comparison-
only members) are approved for membership by senior management and not 
by the Membership and Risk Management Committee;
    iv. correcting Section 1(d) of Rule 2, where GSD is erroneously 
referred to as its predecessors name, GSCC;
    v. deleting subsection (b) of Rule 11B, which has expired;
    vi. changing an incorrect reference to ``Rule 7'' to ``Rule 6C'' in 
Rule 17, Section 4; and
    vii. changing a reference to the ``Membership and Standards 
Committee'' to the ``Membership and Risk Management Committee'' in Rule 
48, Section 2.

4. Technical Corrections in the MBSD Rules

    FICC will renumber MBSD Rule 15 (Notices) of Article X to Rule 16 
as it is in fact the 16th rule in that article.

II. Discussion

    Section 17A(b)(3)(A) of the Act requires, among other things, that 
a clearing agency be organized to facilitate the prompt and accurate 
clearance and settlement of securities transactions.\3\ FICC's proposed 
rule change will eliminate unnecessary or outdated provisions, and make 
technical changes. This should promote greater transparency and 
understanding of FICC's actual practices and policies, which should 
enhance FICC's organizational capacity to facilitate the

[[Page 7984]]

prompt and accurate clearance and settlement of securities 
transactions.
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    \3\ 15 U.S.C. 78q-1(b)(3)(A).
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 III. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act and in 
particular with the requirements of Section 17A of the Act \4\ and the 
rules and regulations thereunder.
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    \4\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-FICC-2004-19) be, and hereby 
is, approved.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
 [FR Doc. E5-639 Filed 2-15-05; 8:45 am]
BILLING CODE 8010-01-P