[Federal Register Volume 70, Number 52 (Friday, March 18, 2005)]
[Notices]
[Pages 13222-13223]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-1184]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51365; File No. SR-FICC-2004-15]


Self-Regulatory Organizations; The Fixed Income Clearing 
Corporation; Notice of Filing of an Amended Proposed Rule Change 
Relating to Trade Submission Requirements and Pre-Netting

March 14, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on March 4, 2005, The Fixed 
Income Clearing Corporation (``FICC'') filed with the Securities and 
Exchange Commission (``Commission'') an amendment to a proposed rule 
change as described in Items I, II, and III below. Prior to being 
amended the proposed rule change was published in the Federal Register 
on November 4, 2004.\2\ The Commission is publishing this notice to 
solicit comments on the proposed rule change as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 50607 (October 29, 
2004), 69 FR 64343.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    As previously noticed, the proposed rule change would amend the 
rules of FICC's Government Securities Division (``GSD'') to broaden its 
trade submission requirements and to prohibit pre-netting activities of 
certain affiliates of its members. As amended, the proposed rule change 
would also require netting members to report foreign affiliate trades 
to 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.\3\
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    \3\ 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 proposed rule change as originally filed would require GSD 
members of FICC to submit data on trades executed or whose settlement 
is cleared and guaranteed by affiliates of GSD members that are 
registered broker-dealers, banks, or futures commission merchants 
organized in the U.S. Because the proposed rule would define a covered 
affiliate as an entity organized in the U.S., the rule would not apply 
to trades executed by non-U.S. affiliates of GSD members.
    FICC has filed an amendment to the proposed rule change that would 
require a netting member to report foreign affiliate trades to FICC. 
The trades would be reported to FICC on an annual basis in the format 
and within the timeframe specified by guidelines to be issued by FICC. 
The reporting requirement would not apply to foreign affiliate trades 
of a foreign affiliate that has executed less than an average of 30 or 
more foreign affiliate trades per business day during any one-month 
period within the prior year.
    The amendment proposes to add definitions of ``foreign affiliate'' 
and ``foreign affiliate trade'' to GSD's rules. A ``foreign affiliate'' 
would be defined as an affiliate of a netting member that is not itself 
a netting member and is a foreign person. A ``foreign affiliate trade'' 
would be defined as a trade executed by a ``foreign affiliate'' of a 
netting member that satisfies the following criteria: (i) The trade is 
eligible for netting pursuant to GSD's rules and (ii) the trade is 
executed with another netting member, with a covered affiliate, or with 
a ``foreign affiliate'' of another netting member. ``Foreign affiliate 
trade'' would not include a trade that is executed between a member and 
its affiliate or between affiliates of the same member. For purposes of 
this definition, the term ``executed'' shall include trades that are 
cleared and guaranteed as to their settlement by the foreign affiliate.
    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 the proposed rule change should reduce 
systemic risk in the government securities marketplace and therefore 
facilitate the establishment of a national system for the prompt and 
accurate clearance and settlement of securities transactions.
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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 would have any 
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 not yet 
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

    Within thirty five days of the date of publication of this notice 
in the Federal Register or within such longer period (i) as the 
Commission may designate up to ninety days of such date if it finds 
such longer period to be appropriate and publishes its reasons for so 
finding or (ii) as to which the self-regulatory organization consents, 
the Commission will:
    (a) By order approve the proposed rule change; or
    (b) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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:

[[Page 13223]]

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-2004-15 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-2004-15. 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 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-2004-15 and should be submitted on 
or before April 8, 2005.

    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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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-1184 Filed 3-17-05; 8:45 am]
BILLING CODE 8010-01-P