[Federal Register Volume 70, Number 147 (Tuesday, August 2, 2005)]
[Notices]
[Page 44413]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-4112]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52124; File No. SR-FICC-2005-09]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Order Granting Approval of a Proposed Rule Change Relating to the 
Collecting of Fees for Services Provided by Other Entities

July 26, 2005.

I. Introduction

    On May 3, 2005, Fixed Income Clearing Corporation (``FICC'') filed 
with the Securities and Exchange Commission (``Commission'') proposed 
rule change SR-FICC-2005-09 pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'').\1\ Notice of the proposal 
was published in the Federal Register on June 13, 2005.\2\ No comment 
letters were received. For the reasons discussed below, the Commission 
is 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. 51789, (June 6, 2005), 
70 FR 34169.
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II. Description

    The proposed rule change amends FICC's rules to allow FICC to 
collect fees for services provided by unregulated subsidiaries of The 
Depository Trust and Clearing Corporation (``DTCC'' and by other 
entities. FICC is a subsidiary of DTCC. Members of FICC and their 
affiliates may from time to time utilize the services of DTCC 
subsidiaries that are not registered as clearing agencies with the 
Commission. Such subsidiaries include Global Asset Solutions LLC and 
DTCC Deriv/Serv LLC. In addition, members of FICC and their affiliates 
may utilize the services of other third parties. FICC has determined 
that it would be more efficient and less costly if the fees that 
members agree to pay for such services were collected by FICC rather 
than through independent billing mechanisms that would otherwise have 
to be established by each subsidiary of DTCC and third party that is 
not a registered clearing agency.
    FICC's rules currently allow for fee collection arrangements with 
respect to collection of fees from members. The proposed rule change 
further clarifies this practice and facilitates collection of fees with 
respect to affiliates of members.\3\ FICC will enter into appropriate 
agreements with such subsidiaries and others regarding the collection 
of fees.
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    \3\ FICC currently has such fee collection arrangements with The 
Bond Market Association (``TMBA'') pursuant to specific rules 
provisions. FICC continues to collect fees on behalf of TBMA; 
however, pursuant to this filing, the existing rules provisions 
which govern the TBMA arrangement will be replaced with broader 
language intended to cover all such fee collection arrangements 
entered into by FICC.
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III. Discussion

    Section 17A(a)(1)(B) of the Act provides that inefficient 
procedures for clearance and settlement impose unnecessary costs on 
investors and persons facilitating transactions by and acting on behalf 
of investors.\4\ Although the services provided by unregulated DTCC 
subsidiaries and by other third parties are not core clearance and 
settlement services, they are related to the clearance and settlement 
operations of FICC and of its members. By streamlining the fee 
collection process for these services so that FICC's members will pay 
these fees to FICC as a part of their normal monthly FICC bills, the 
proposed rule change should help to improve efficiency in the 
operations of FICC members and thereby should remove unnecessary cost 
for FICC members and for the persons (i.e., the DTCC subsidiaries and 
the other entities providing services to FICC members) facilitating 
transactions by and acting on behalf of investors. Accordingly, the 
Commission finds that the proposed rule change is consistent with the 
requirements of section 17A of the Act.
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    \4\ 15 U.S.C. 78q-1(a)(A)(B).
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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, 
that the proposed rule change (File No. SR-FICC-2005-09) 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. E5-4112 Filed 8-1-05; 8:45 am]
BILLING CODE 8010-01-P