[Federal Register Volume 75, Number 137 (Monday, July 19, 2010)]
[Notices]
[Pages 41908-41909]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-17489]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62478; File No. SR-FICC-2010-02]
Self-Regulatory Organizations; Fixed Income Clearing Corporation;
Notice of Filing of Proposed Rule Change To Amend the Rules of the
Government Securities Division and the Mortgage-Backed Securities
Division To Change the Classification of U.S. Branches or Agencies of
Non-U.S. Banks From Foreign to U.S. Members
July 9, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder \2\ notice is hereby given that
on June 24, 2010, 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 substantially prepared 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).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The purpose of this proposed rule change is to amend the rules of
FICC's Government Securities Division (``GSD'') and the Mortgage-Backed
Securities Division (``MBSD'') to change the classification of U.S.
branches or agencies of non-U.S. banks from ``foreign'' to ``U.S.
members''.
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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
FICC currently classifies as ``foreign'' its members that are U.S.
branches or agencies of non-U.S. banks (``U.S. Branches''). FICC is
proposing to amend the rules of the GSD and MBSD to classify such U.S.
Branches as U.S. members, based particularly on the rationale that such
U.S. Branches are regulated by U.S. and or state regulators. The
proposed rule change harmonizes FICC's rules with those of its
affiliates, The Depository Trust Company and National Securities
Clearing Corporation, which presently classify U.S. branches of foreign
banks as domestic members (based on domestic regulation).\3\
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\3\ This is reflected in Section 2 of DTC's Policy Statements on
the Admission of Participants, and Addendum O of NSCC's Rules
entitled ``Admission of Non-U.S. Entities as Direct NSCC Members''.
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The proposed rule change reflects that the U.S. Branches are
regulated by a U.S. regulator and/or state regulator so that an
insolvency of such a member would be determined by applicable domestic
``ring-fence'' laws.\4\ The appropriate domestic regulator treats U.S.
Branches as U.S. entities for most significant matters. Under the
proposed rule changes, such members will be treated as domestic members
for all purposes under FICC's rules and procedures, unless FICC states
otherwise in the Rules.\5\
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\4\ In the United States, ``ring-fencing'' refers to the
procedure for dealing with branches of agencies of insolvent foreign
banks in the United States pursuant to which the state or federal
regulator, as applicable, will seize and administer the local assets
of an insolvent institution, with a preference for local creditors,
in a liquidation that is separate from the liquidation of the parent
foreign bank as a whole.
\5\ For example, if this Rule change is approved such members
will no longer be required to submit annual updates to their foreign
legal opinions unless FICC deems it necessary to address legal risk.
Applicants in this category will, however, continue to be required
to submit an initial foreign legal opinion on their home country law
with their membership application.
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[[Page 41909]]
FICC believes the proposed rule change is consistent with the
requirements of Section 17A of the Act \6\ and the rules and
regulations thereunder because the proposed modifications would
facilitate FICC's prompt and accurate clearance and settlement of
securities transactions by providing consistent treatment to Members
that are regulated by a U.S. and/or state regulator and that are
subject to a domestic insolvency regime.
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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 would 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 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
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 the 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 is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commissions Internet comment form (http://www.sec.gov/rules/sro.shtml) or
Send an e-mail to [email protected]. Please include
File Number SR-FICC-2010-02 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-2010-02. 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 Web site viewing and
printing in the Commission's Public Reference Section, 100 F Street,
NE., Washington, DC 20549-1090, on official business days between the
hours of 10 a.m. and 3 p.m. Copies of such filings will also be
available for inspection and copying at the principal office of the
FICC and on FICC's Web site at http://www.dtcc.com/downloads/legal/rule_filings/2009/ficc/2009-02.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-2010-02
and should be submitted on or before August 9, 2010.
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-17489 Filed 7-16-10; 8:45 am]
BILLING CODE 8011-01-P