[Federal Register Volume 70, Number 62 (Friday, April 1, 2005)]
[Notices]
[Page 16884]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-1457]



[[Page 16884]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51440; File No. SR-FICC-2004-23]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Order Granting Approval of a Proposed Rule Change To Change the Notice 
Period Required for the Closing of Participant Accounts or Withdrawing 
From Membership in Its Mortgage-Backed Securities Division

March 28, 2005.

I. Introduction

    On November 22, 2004, the Fixed Income Clearing Corporation 
(``FICC'') filed with the Securities and Exchange Commission 
(``Commission'') proposed rule change File No. SR-FICC-2004-23 pursuant 
to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'').\1\ Notice of the proposed rule change was published in the 
Federal Register on February 22, 2005.\2\ No comment letters were 
received. For the reasons discussed below, the Commission is now 
granting approval of the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 51206 (February 15, 
2005), 70 FR 8648.
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II. Description

    The purpose of the rules change is to amend the timeframe in which 
a participant, limited purpose participant, or EPN user can cease to 
maintain an account or can voluntarily withdraw as a participant from 
the Mortgage-Backed Securities Division (``MBSD'') of FICC.
    Currently, the MBSD's Rules expressly state that in order to cease 
to maintain an account or to voluntarily withdraw as a participant, a 
participant must notify FICC of its intent to do so in writing and that 
thereafter FICC management and the participant must wait ten days for 
the cessation or withdrawal to become effective. Upon review, FICC has 
determined that imposing this mandatory time period is unnecessary. 
FICC believes it should have the flexibility to close an account or to 
permit withdrawal within a shorter period. The rule changes provide 
this flexibility by providing that: (1) A participant must provide ten 
days' written notice of account cessation or withdrawal from membership 
but the MBSD can accept termination within a shorter period; (2) the 
requested account cessation or withdrawal would not be effective until 
accepted by the MBSD; and (3) the MBSD's acceptance will be evidenced 
by a notice to all members announcing the account cessation or 
withdrawal effective date.

III. Discussion

    Section 17A(b)(3)(F) of the Act requires that the rules of a 
clearing agency be designed to assure the safeguarding of securities 
and funds which are in the custody or control of the clearing agency or 
for which it is responsible.\3\ The Commission finds that FICC's 
proposed rule change is consistent with this requirement because while 
it will provide the FICC with greater flexibility with respect to 
closing accounts of participants and to permitting the voluntary 
withdrawal of participants, it has been designed with sufficient 
safeguards to allow the MBSD to continue to safeguard the securities 
and funds in its custody and control or for which it is responsible.
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    \3\ 15 U.S.C. 78q-1(b)(3)(F).
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IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act and 
in particular section 17A of the Act and the rules and regulations 
thereunder.
    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\4\ that the proposed rule change (File No. SR-FICC-2004-23) be and 
hereby is approved. 
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    \4\ 15 U.S.C. 78s(b)(2).

    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. E5-1457 Filed 3-31-05; 8:45 am]
BILLING CODE 8010-01-P