[Federal Register Volume 71, Number 205 (Tuesday, October 24, 2006)]
[Notices]
[Pages 62324-62325]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-17731]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54609; File No. SR-FICC-2006-11]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing of a Proposed Rule Change Relating To Establishing New 
Reporting Processes To Support the Bilateral Comparison of Pool Details 
Associated With Specified Pool Trade Activity

October 16, 2006.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on June 15, 2006, the Fixed 
Income Clearing Corporation (``FICC'') filed with the Securities and 
Exchange Commission (``Commission'') and on June 30, 2006, amended the 
proposed rule change as 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 persons.
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    \1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change would add new rules to FICC's Mortgage 
Backed Securities Division (``MBSD'') Rulebook that would establish new 
reporting processes to support the bilateral comparison of pool details 
associated with specified pool trade (``SPT'') activity.

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.\2\
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    \2\ 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 purpose of this filing is to implement in MBSD's Rulebook new 
reporting processes to support the bilateral comparison of pool details 
associated with SPT's. This is the first of three new services MBSD 
plans to offer the mortgage-backed securities industry. The new 
services will be Real Time Trade Matching (``RTTM'') Specified Pool 
Trade Matching, Electronic Pool Notification Pool Substitution, and 
Central Counterparty Pool Netting with Guaranteed Settlement.\3\
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    \3\ FICC has published two white papers that discuss its plans 
to develop central counterparty services for MBSD. Fixed Income 
Clearing Corporation as Central Counterparty for Mortgage-Backed 
Securities (June 2003) and A Central Counterparty for Mortgage-
Backed Securities: Paving the Way (April 2006), which are available 
online at http://www.ficc.com/mbs/docs/whitepapers/final.ccp.0617.pdf and http://www.dtcc.com/ThoughtLeadership/whitepapers/ccp.pdf, respectively.
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    Currently, MBSD does not support SPT matching. As a result, members 
must submit SPT's to MBSD as ``to be announced'' (``TBA'') trades for 
matching on a trade-for-trade basis. These trades are processed through 
MBSD's comparison and clearing system as TBA's and are risk managed at 
the TBA level using par amount.\4\ MBSD reports these trades to members 
through the MBS Purchase and Sale Report and the Open Commitment 
Report, which reports provide binding confirmation of these trades to 
members but do not transmit actual pool level details to the member. 
Because these original trades must currently be submitted at the TBA 
level, MBSD members must perform exception processing to convert the 
SPT data to the associated TBA level. In addition, the selling member 
must utilize MBSD's EPN service to supplement the original trade 
submission with pool level details.
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    \4\ Par amount could be the original face or current face 
submitted by members.
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    To make this process more efficient for its members, FICC is 
proposing to enable MBSD members to submit the pool number and original 
face for all SPT activity through RTTM. However, this proposal will not 
change how MBSD currently risk manages these trades at the TBA level. 
MBSD's rules will continue to stipulate that SPT's may be treated as 
TBA's in instances of member insolvency.
    In addition, FICC proposes to make two new reports available to 
members: the RTTM Purchase and Sale Report and the RTTM Open Commitment 
Report.\5\ These reports would reflect the submission of pool number 
and original

[[Page 62325]]

face value \6\ as matching criteria submitted by members. Finally, FICC 
is proposing to include new fees for the submission of SPTs to the 
Schedule of Charges in the MBSD Rulebook.
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    \5\ These reports will not replace the MBSD's Purchase and Sale 
Report or the Open Commitment Report, which will continue to reflect 
specified pool trades as TBA trades.
    \6\ In addition to pool number and original face value, existing 
matching fields (such as TBA CUSIP and price) will continue to be 
populated by members.
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    FICC believes that the proposed rule change is consistent with the 
requirements of section 17A of the Act \7\ and the rules and 
regulations thereunder because it should improve the reporting of SPT 
information to members and thereby should improve the accurate 
reporting, clearance, and settlement of securities.
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    \7\ 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 will 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

    FICC has not solicited or received written comments relating to the 
proposed rule change. FICC will notify the Commission of any written 
comments it receives.

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 such 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, as amended, 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 No. SR-FICC-2006-11 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington DC 20549-1090.

All submissions should refer to File No. SR-FICC-2006-11. 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, 100 F Street, NE., 
Washington, DC 20549. Copies of such filing also will be available for 
inspection and copying at FICC's principal office and on FICC's Web 
site at http://ficc.com/gov/gov.docs.jsp?NS-query=#rf. 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 
submission should refer to File No. SR-FICC-2006-11 and should be 
submitted on or before November 14, 2006.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E6-17731 Filed 10-23-06; 8:45 am]
BILLING CODE 8011-01-P