[Federal Register Volume 74, Number 50 (Tuesday, March 17, 2009)]
[Notices]
[Pages 11385-11386]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-5687]



[[Page 11385]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59558; File No. SR-FICC-2009-04]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Add Debt Securities That Are Issued Under the Debt Guarantee Program 
Component of the Federal Deposit Insurance Corporation's Temporary 
Liquidity Guarantee Program to the GCF Repo Service

March 11, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on February 25, 2009, 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. 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).
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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 debt securities 
that are issued under the Debt Guarantee Program component of the 
Federal Deposit Insurance Corporation's (``FDIC's'') Temporary 
Liquidity Guarantee Program (``TLGP'') to FICC's GCF Repo service.\2\
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    \2\ This filing pertains only to the GCF Repo service and does 
not propose to add the FDIC-guaranteed securities to the GSD's 
Delivery Versus Payment (``DVP'') service.
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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.\3\
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    \3\ 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 GCF Repo service allows Government Securities Division 
(``GSD'') dealer members to trade general collateral repurchase 
agreements (``repos'') throughout the day without requiring intraday, 
trade-for-trade settlement on a DVP basis. The service allows the 
dealers to trade such general collateral repos, based on rate and term, 
throughout the day with interdealer broker netting members on a blind 
basis. Standardized, generic CUSIP numbers have been established 
exclusively for GCF Repo processing and are used to specify the 
acceptable type of underlying eligible collateral.
    FICC is proposing to add an additional collateral type to the GCF 
Repo service. Specifically, FICC proposes to add debt securities that 
are issued under the Debt Guarantee Program component of FDIC's TLGP to 
the GCF Repo service. These securities are DTC-eligible securities.\4\
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    \4\ The present rule filing applies only to these specific FDIC-
insured securities. In the future, if FICC determines to add 
additional DTC-eligible securities to the GCF Repo service, FICC 
would submit a proposed rule change filing to the Commission for 
this purpose.
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    The TLGP, one of the steps taken by the U.S. Government to 
stabilize the credit markets and to stimulate lending, was designed to 
allow banks to issue FDIC-insured debt to ensure that the banks would 
be able to roll over any debt coming due in the coming months. The 
guarantee consists of timely payment of principal and interest. The 
expiration of the FDIC's guarantee is the earlier of either the 
maturity date of the issued debt or June 2012.
    The Financial Industry Regulatory Authority (``FINRA'') has 
recently advised the Securities Industry and Financial Markets 
Association (``SIFMA'') on the capital charge treatment that FINRA 
plans to employ with respect to the guaranteed debt securities that are 
issued by an affiliate of a broker-dealer and that are held in 
inventory by the broker-dealer. Specifically, FINRA has stated that 
broker-dealers that may be allocated the FDIC-guaranteed debt 
securities issued by affiliated entities as part of the GCF Repo 
service will not need to take a 100 percent capital charge on the 
reverse repo contract because they have no control over the collateral 
allocated by FICC and because the allocated collateral is returned the 
next morning. Given this favorable treatment, members of SIFMA that are 
active in the GCF Repo service have requested that FICC add the FDIC-
guaranteed debt securities to the service.
    All current GCF Repo processing will remain unchanged. The fact 
that the product is a DTC-eligible security will not affect GCF Repo 
processing.\5\ FICC has determined that with respect to its risk 
management processes, the FDIC-insured securities will be treated the 
same as all other GCF Repo-eligible collateral.
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    \5\ Specifically, if a GCF Repo participant engages in a trade 
using the new GCF Repo CUSIP, the participant will need to pledge 
the security free of payment to its clearing bank using the 
mechanism available at DTC. Once the security is pledged to the 
dealer's clearing bank, it is available for tri-party or GCF Repo 
processing. No additional processing is being introduced to the GCF 
Repo service by this rule filing. The present filing does not 
require a change to the text of the rules of GSD.
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    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 applicable to FICC because the proposed rule 
change enables FICC to expand an important service that provides 
members with a continuing ability to engage in general collateral 
trading activity in a safe and efficient manner. As such, the proposed 
rule filing facilitates the prompt and accurate clearance and 
settlement of securities transactions.
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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 on 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

    No written comments relating to the proposed rule change have 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)(iii) of the Act \7\ and Rule 19b-4(f)(4) \8\ 
thereunder because the proposed rule change effects a change in an 
existing service of FICC that (i) does not adversely affect the 
safeguarding of securities or funds in the custody or control of FICC 
or for which it is responsible and (ii) does not

[[Page 11386]]

significantly affect the respective rights of the clearing agency or 
persons using the service. At any time within sixty days of the filing 
of such 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)(iii).
    \8\ 17 CFR 240.19b-4(f)(4).
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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 
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-2009-04 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-FICC-2009-04. 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 changes 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, on official business days between the hours 
of 10 a.m. and 3 p.m. Copies of such filings also will be available for 
inspection and copying at the principal office of FICC and on FICC's 
Web site at http://www.dtcc.com/legal/rule_filings/ficc/2009.php. 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-2009-04 and should be 
submitted on or before April 7, 2009.

    For the Commission by the Division of Trading and Markets, 
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. E9-5687 Filed 3-16-09; 8:45 am]
BILLING CODE 8011-01-P