82 FR 61624 - Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Eliminate the Development Fees From the Mortgage-Backed Securities Division Clearing Rules

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 248 (December 28, 2017)

[Federal Register Volume 82, Number 248 (Thursday, December 28, 2017)]
[Notices]
[Pages 61624-61625]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-28001]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82386; File No. SR-FICC-2017-023]


Self-Regulatory Organizations; Fixed Income Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Eliminate the Development Fees From the Mortgage-Backed Securities 
Division Clearing Rules

December 21, 2017.
    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 December 19, 2017, 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 by the clearing agency. FICC filed the 
proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and 
Rule 19b-4(f)(2) thereunder.\4\ 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The proposed rule change consists of the elimination of the 
Development Fees from the Fee Schedule in the FICC Mortgage-Backed 
Securities Division (``MBSD'') Clearing Rules (``MBSD Rules''),\5\ as 
described in greater detail below.
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    \5\ Capitalized terms not defined herein are defined in the MBSD 
Rules, available at http://www.dtcc.com/legal/rules-and-procedures.
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II. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

    In its filing with the Commission, the clearing agency 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. The clearing agency has prepared summaries, 
set forth in sections A, B, and C below, of the most significant 
aspects of such statements.

(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

1. Purpose
    On December 30, 2014, FICC filed proposed rule change SR-FICC-2014-
12 \6\ with the Commission to amend the MBSD Rules to include fees to 
cover the development cost of the MBSD novation service (``Development 
Fees'').\7\ The filing stated that Clearing Members would be assessed 
the Development Fees as of January 1, 2015 and such fees would remain 
in effect for three (3) consecutive years.\8\ Because the Development 
Fees will have been in place for three (3) consecutive years as of 
December 31, 2017, and FICC has used the Development Fees to develop 
the operational aspect of the MBSD novation service,\9\ FICC is 
proposing to

[[Page 61625]]

eliminate the Development Fees from the MBSD Rules as of January 1, 
2018.
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    \6\ See Securities Exchange Act Release No. 74033 (January 12, 
2015), 80 FR 2452 (January 16, 2015) (SR-FICC-2014-12).
    \7\ Id. at 2453.
    \8\ Id.
    \9\ See Securities Exchange Act Release No. 80716 (May 18, 
2017), 82 FR 23852 (May 24, 2017) (SR-FICC-2017-012). Specifically, 
the purpose of the rule filing SR-FICC-2017-012 was to amend the 
MBSD Rules to (1) move the time that FICC treats itself as the 
settlement counterparty for SBO-Destined Trades to the time of trade 
comparison, which is earlier in the lifecycle of the trade, (2) move 
the time that FICC novates and treats itself as the settlement 
counterparty for Trade-for-Trade Transactions to the time of trade 
comparison, which is earlier in the lifecycle of the trade, (3) 
novate and establish FICC as the settlement counterparty at the time 
of trade comparison for Specified Pool Trades, and (4) guarantee and 
novate Stipulated Trades, a proposed new trade type, at the time of 
trade comparison and treat FICC as the settlement counterparty at 
such time. In connection with these changes, FICC also proposed new 
processes that would promote operational efficiencies for Clearing 
Members. The full text of rule filing SR-FICC-2017-012 is available 
at http://www.dtcc.com/legal/sec-rule-filings.
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2. Statutory Basis
    Section 17A(b)(3)(D) of the Act requires that the MBSD Rules 
provide for the equitable allocation of reasonable dues, fees, and 
other charges among its participants.\10\ FICC believes that its 
proposal to eliminate the Development Fees would be equitable because 
the proposed change would be eliminated for all Clearing Members. FICC 
believes that the proposed change to eliminate the Development Fees is 
reasonable because, consistent with SR-FICC-2014-12 (which instituted 
these fees),\11\ the Development Fees will have been in place for three 
(3) consecutive years as of December 31, 2017, and such fees have been 
used to develop the operational aspects of the MBSD novation service 
that has been implemented. Therefore, FICC believes the proposed rule 
change is consistent with the requirements of Section 17A(b)(3)(D) of 
the Act.
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    \10\ 15 U.S.C. 78q-1(b)(3)(D).
    \11\ Supra note 6.
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    The proposed rule change is also designed to be consistent with 
Rule 17Ad-22(e)(23) under the Act. Rule 17Ad-22(e)(23) requires FICC, 
inter alia, to establish, implement, maintain and enforce written 
policies and procedures reasonably designed to provide sufficient 
information to enable participants to identify and evaluate the risks, 
fees, and other material costs they incur by participating in FICC.\12\ 
The proposed rule change, as described above, would amend the MBSD 
Rules to eliminate the Development Fees. As such, FICC believes that 
the proposed change would provide sufficient information to enable 
Clearing Members to evaluate fees and other material costs of utilizing 
MBSD's services, in accordance with the requirements of Rule 17Ad-
22(e)(23), promulgated under the Act, cited above.
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    \12\ 17 CFR 240.17Ad-22(e)(23).
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(B) Clearing Agency's Statement on Burden on Competition

    FICC does not believe that the proposed change would impact, or 
impose any burden on, competition \13\ because the elimination of the 
Development Fees would result in a reduction of costs incurred by 
Clearing Members that utilize MBSD's services.
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    \13\ 15 U.S.C. 78q-1(b)(3)(I).
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(C) Clearing Agency'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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \14\ and paragraph (f) of Rule 19b-4 
thereunder.\15\ At any time within 60 days of the filing of the 
proposed rule change, the Commission summarily may temporarily suspend 
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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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f).
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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 email to [email protected]. Please include 
File Number SR-FICC-2017-023 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-FICC-2017-023. This file 
number should be included on the subject line if email 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 website (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 website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549-1090 on official business days between the hours of 10:00 a.m. 
and 3:00 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of FICC and on DTCC's 
website (http://dtcc.com/legal/sec-rule-filings.aspx). All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly.
    All submissions should refer to File Number SR-FICC-2017-023 and 
should be submitted on or before January 18, 2018.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-28001 Filed 12-27-17; 8:45 am]
 BILLING CODE 8011-01-P