[Federal Register Volume 71, Number 234 (Wednesday, December 6, 2006)]
[Notices]
[Pages 70817-70818]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-20658]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54819; File No. SR-FICC-2006-17]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing of a Proposed Rule Change Relating to Clearing Fund 
Deficiency Calls

November 27, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on October 16, 2006, the 
Fixed Income Clearing Corporation (``FICC'') filed with the Securities 
and Exchange Commission (``Commission'') 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 adjust the deadline for satisfying a 
clearing fund deficiency call from 10:30 a.m. to 9:30 a.m. in the 
Schedule of Timeframes in FICC's Government Securities Division 
(``GSD'') rulebook.

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 rule filing is to amend GSD's rules to change 
the time when clearing fund deficiency calls are due from netting 
members. In 2005, the Commission approved a FICC rule filing that 
established the Federal Reserve's National Settlement System (``NSS'') 
as the method by which GSD netting members could satisfy their funds-
only settlement amounts.\3\ FICC believes that this rule filing 
improved GSD's funds-only settlement process because it created a more 
automated and centralized payment system for the satisfaction of funds-
only settlement debits and credits. Through NSS, the GSD funds-only 
settlement debit and credit process is run by 10 a.m.\4\ each business 
day.
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    \3\ Securities Exchange Act Release No. 52853 (Nov. 29, 2005), 
70 FR 72682 (Dec. 6, 2005) [SR-FICC-2005-14].
    \4\ All times referenced herein are New York times.
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    Currently, clearing fund deficiency call payments are due from GSD 
netting members at 10:30 a.m. In addition, clearing fund deficiencies 
due to FICC from netting members must be satisfied prior to the release 
of funds-only

[[Page 70818]]

settlement credits. When a netting member has not satisfied its 
clearing fund deficiency payment by approximately 9:50 a.m., GSD must 
remove that member from the automated NSS process and settle with them 
manually outside the NSS system. Such manual processing results in 
administrative burdens for FICC staff and undermines the efficiencies 
FICC sought to achieve by using the NSS system.
    For this reason, FICC proposes to change the timing of GSD clearing 
fund deficiency calls to 9:30 a.m. from 10:30 a.m.\5\ Doing so would 
enable GSD to resolve any unsatisfied deficiencies with netting members 
well in advance of the 10 a.m. funds-only settlement process that takes 
place through NSS and would allow GSD to better utilize the automated 
NSS process. GSD intends to implement the new timeframe for clearing 
fund deficiency calls on January 1, 2007.
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    \5\ This rule filing does not affect a netting member's 
obligation to make its funds-only settlement payment to FICC on 
time.
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    As is currently the case in its rules, FICC will reserve the right 
to extend this deadline on days on which there are operational or 
systems difficulties that would reasonably prevent members from 
satisfying a deficiency call by 9:30 a.m.
    FICC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \6\ and the rules and 
regulations thereunder because it will improve the efficiency of FICC's 
margining and settlement processes and therefore will help FICC to 
safeguard securities and funds in its possession or for which it is 
responsible.
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    \6\ 15 U.S.C. 78q-1.
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A. 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-2006-17 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-2006-17. 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-2006-17 and should be 
submitted on or before December 27, 2006.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-20658 Filed 12-5-06; 8:45 am]
BILLING CODE 8011-01-P