[Federal Register Volume 72, Number 90 (Thursday, May 10, 2007)]
[Notices]
[Pages 26662-26663]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-8913]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55701; File No. SR-FICC-2007-02]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Clarify the Rules of Its Government Securities Division With Respect to 
Obligations Associated With Brokered Repo Trades

May 3, 2007
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on March 12, 2007, the Fixed 
Income Clearing Corporation (``FICC'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change described 
in Items I, II, and III below, which items have been prepared primarily 
by FICC. FICC filed the proposed rule change pursuant to Section 
19(b)(3)(A)(i) of the Act \2\ and Rule 19b-4(f)(1) thereunder \3\ so 
that the proposal was effective upon filing with the Commission. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested parties.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78s(b)(3)(A)(i).
    \3\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The purpose of the proposed rule change is to add language to 
Section 3 to Rule 19 (Special Provisions for Brokered Repo 
Transactions) of FICC's Government Securities Division (``GSD'') Rules 
to make explicit that blind broker repo trades assumed by FICC are 
included in the calculation of the parties to such trades' receive and 
deliver obligations 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 these 
statements.\4\
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    \4\ 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

    In 2006, the Commission approved a clarifying change to FICC's 
Rules relating to a longstanding practice by FICC of assuming brokers' 
positions in certain blind broker repo transactions.\5\ As part of that 
filing, a new Section 5 was added to Rule 19 of the GSD Rules to 
expressly provide for this practice. FICC has determined that an 
additional change as set forth below is necessary to further clarify 
the GSD Rules with respect to obligations associated with brokered repo 
trades.
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    \5\ Securities Exchange Act Release No. 54487 (September 22, 
2006), 71 FR 58025 (October 2, 2006) [File No. SR-FICC-2005-17].
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    Section 3 of GSD Rule 19 allows FICC to deem a repo brokered trade 
as compared based solely upon the submission of trade data by the 
broker despite an untimely submission of data by the dealer and states 
that such a trade would be included in the calculation of the margin 
and mark-to-market payments of the parties to the trade. FICC is adding 
language to Section 3 to make it clear that such a trade is also 
included in the calculation of the parties' receive and deliver 
obligations, which is consistent with the language in Section 5 of Rule 
19. The proposed change is technical in nature and does not reflect a 
change in the practices or policies of GSD.
    The proposed rule change is consistent with the requirements of 
Section 17A of the Act \6\ and the rules and regulations thereunder 
applicable to FICC because the proposed change is a clarification that 
does not adversely affect the safeguarding of securities and funds in 
the custody or control of the clearing agency or for which it is 
responsible and does not adversely affect the respective rights or 
obligations of the clearing agency or its members.
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    \6\ 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

    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

    The foregoing rule change has become effective upon filing pursuant 
to Section 19(b)(3)(A)(i) of the Act \7\ and Rule 19b-4(f)(1) \8\ 
thereunder because it constitutes a stated policy, practice, or 
interpretation with respect to the meaning, administration, or 
enforcement of an existing rule of FICC. At any time within 60 days of 
the filing of the proposed rule change, the Commission may summarily 
abrogate such rule change if it appears to the Commission that such 
action is necessary or appropriate in the public interest, for the 
protection of investors, or otherwise in furtherance of the purposes of 
the Act.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(i).
    \8\ 17 CFR 240.19b-4(f)(1).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule

[[Page 26663]]

change 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 Number SR-FICC-2007-02 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 Number SR-FICC-2007-02. 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. The text of the proposed rule change is 
available at FICC, the Commission's Public Reference Room, and http://www.ficc.com/commondocs/rule.filings/rule.filing.07-02.pdf. 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-2007-02 and should be 
submitted on or before May 31, 2007.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-8913 Filed 5-9-07; 8:45 am]
BILLING CODE 8010-01-P