83 FR 27812 - Self-Regulatory Organizations; Fixed Income Clearing Corporation; Order Approving Proposed Rule Change To Amend the Fee Structure of the Government Securities Division Rulebook
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 115 (June 14, 2018)
Federal Register Volume 83, Issue 115 (June 14, 2018)
| Page Range | 27812-27816 | |
| FR Document | 2018-12754 |
[Federal Register Volume 83, Number 115 (Thursday, June 14, 2018)] [Notices] [Pages 27812-27816] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-12754] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-83401; File No. SR-FICC-2018-003] Self-Regulatory Organizations; Fixed Income Clearing Corporation; Order Approving Proposed Rule Change To Amend the Fee Structure of the Government Securities Division Rulebook June 8, 2018. On April 27, 2018, Fixed Income Clearing Corporation (``FICC'') filed with the Securities and Exchange Commission (``Commission'') proposed rule change SR-FICC-2018-003, pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder.\2\ The proposed rule change was published for comment in the Federal Register on May 8, 2018.\3\ The Commission received one comment letter on the proposed rule change.\4\ For the reasons discussed below, the Commission approves the proposed rule change. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ Securities Exchange Act Release No. 83153 (May 2, 2018), 83 FR 20882 (May 8, 2018) (SR-FICC-2018-003) (``Notice''). \4\ Letter from Ted Bragg, Vice President--Head of U.S. Fixed Income, Nasdaq (``Nasdaq''), dated May 14, 2018, to Eduardo A. Aleman, Assistant Secretary, Commission (``Nasdaq Letter'') available at https://www.sec.gov/comments/sr-ficc-2018-003/ficc2018003.htm. --------------------------------------------------------------------------- I. Description of the Proposed Rule Change The proposed rule change would amend the FICC Government Securities Division (``GSD'') Rulebook (``GSD Rules'') \5\ to modify the GSD Fee Structure. FICC states that it designed the proposed rule change to reduce complexity and to better align pricing with the costs of services provided by GSD.\6\ More specifically, FICC states that the transaction processing fees and the position management fees associated with the delivery-versus-payment (``DVP'') service account for approximately 30 percent and 70 percent, respectively, of GSD's projected costs from the DVP service.\7\ Accordingly, FICC states that the proposed fee changes are designed to align GSD's revenue with that 30/70 percent split between transaction processing and position management costs, respectively.\8\ In doing so, FICC would shift the GSD Fee Structure regarding the DVP service away from the existing volume-driven approach to a position-based approach.\9\ Ultimately, FICC expects GSD's net revenue to remain relatively unchanged as a result of this proposal.\10\ --------------------------------------------------------------------------- \5\ Available at http://www.dtcc.com/legal/rules-and-procedures. \6\ Notice, 83 FR at 20882. \7\ Id. at 20884. \8\ Id. \9\ Id. \10\ Id. --------------------------------------------------------------------------- A. Proposed Changes to the GSD Fee Structure The proposed GSD Fee Structure would, in effect, establish 4 new fees, modify 1 existing fee, and eliminate 12 fees.\11\ These proposed changes are summarized below. --------------------------------------------------------------------------- \11\ Id. --------------------------------------------------------------------------- 1. New Fees In proposed Section I of the GSD Fee Structure, FICC would replace the seven-tiered trade submission fees for both dealer accounts and broker accounts with a single transaction processing fee that would be charged to GSD members (``Members'') upon the comparison of a side of a buy/sell transaction or a Repo Transaction in the DVP service.\12\ Specifically, dealer accounts would be charged a fee of $0.04 per million par value for transaction processing, and broker accounts would be charged a fee of [[Page 27813]] $0.02 per million par value for transaction processing.\13\ --------------------------------------------------------------------------- \12\ Id. \13\ Id. Broker accounts submit two sides per transaction. Id. As such, a broker account would be charged a total of $0.04 per million par value (i.e., $0.02 per million par value times two) for each transaction. Id. --------------------------------------------------------------------------- FICC also would add two position management fees applicable to the DVP service in proposed Section II of the GSD Fee Structure.\14\ The first position management fee would be the intraday position fee of $0.04 per million par value that would be calculated for a Member each business day based on the largest gross position of the Member (including positions of any non-Member that the Member is clearing for) that business day.\15\ FICC states that it would determine the gross position of a Member in 15-minute intervals between 9:00 a.m. and 4:00 p.m. each business day by netting the par value of all compared buy/ sell transactions, Repo Transactions, and unsettled obligations of the Member (including any such activity submitted by the Member for a non- Member that the Member is clearing for) by CUSIP number and taking the sum of the absolute par value of each such CUSIP number.\16\ --------------------------------------------------------------------------- \14\ Notice, 83 FR at 20882. \15\ Id. \16\ Id. --------------------------------------------------------------------------- The second position management fee would be the end of day position fee of $0.115 per million par value that would be calculated for a Member each business day based on the end of day gross position of the Member (including positions of any non-Member that the Member is clearing for) that business day.\17\ FICC states that it would determine the end of day gross position of a Member by netting the par value of all compared buy/sell transactions, Repo Transactions, and unsettled obligations of the Member (including any such activity submitted by the Member for a non-Member that the Member is clearing for) at the end of the business day by CUSIP number and taking the sum of the absolute par value of each such CUSIP number.\18\ --------------------------------------------------------------------------- \17\ Id. at 20884-85. \18\ Id. at 20885. --------------------------------------------------------------------------- 2. Modified Existing Fee FICC would modify the existing minimum monthly fee in proposed Section V of the GSD Fee Structure.\19\ The minimum monthly fee would be increased from $1,000 to $2,500 per account and would apply to all accounts of every comparison-only Member and netting Member instead of just their sole or primary account.\20\ FICC states that it is proposing to increase the minimum monthly fee to $2,500 per account because FICC believes this change would better reflect GSD's costs of account monitoring.\21\ --------------------------------------------------------------------------- \19\ Id. \20\ Id. The minimum monthly fee would apply to all accounts of a netting Member, including any account the netting Member may have as a sponsoring Member. Id. \21\ Notice, 83 FR at 20885. --------------------------------------------------------------------------- 3. Eliminated Fees FICC is proposing to delete fees in Section I of the GSD Fee Structure that are no longer applicable.\22\ Specifically, FICC is proposing to delete Section I.B. of the GSD Fee Structure, which imposes certain surcharges on Members submitting trade data to GSD using submission methods other than the Interactive Submission Method (e.g., the Multiple Batch Submission Method or the Single Batch Submission Method).\23\ FICC states that these surcharges are no longer required because all Members currently submit trade data to GSD using the Interactive Submission Method, and FICC does not expect that to change in the future because of technological advancements in real-time trade submission capability across the financial industry.\24\ FICC would also make conforming re-lettering of the subsequent provisions in Section I of the GSD Fee Structure.\25\ --------------------------------------------------------------------------- \22\ Id. at 20884. \23\ Id. \24\ Id. \25\ Id. --------------------------------------------------------------------------- FICC would eliminate all netting fees provided in renumbered Section IV of the GSD Fee Structure, including (i) the two seven-tiered netting fees for both broker accounts and dealer accounts; (ii) the ``into the net'' fees of $0.015 per one million of par value for broker accounts and $0.016 per one million of par value for dealer accounts for each compared trade, start leg of a Repo Transaction, close leg of a Repo Transaction, fail deliver obligation, and fail receive obligation; and (iii) the ``out of the net'' fees of $0.175 per one million of par value for each deliver obligation and receive obligation created as a result of the netting process.\26\ --------------------------------------------------------------------------- \26\ Id. at 20885. --------------------------------------------------------------------------- In addition, FICC would delete from renumbered Section IV.C. of the GSD Fee Structure the Repo Transaction processing fees and related language for Term Repo Transactions in the DVP service that have been compared and netted but not yet settled.\27\ FICC states that this would no longer separate the Repo Transaction processing fees for Term Repo Transactions.\28\ Rather, FICC states that the Term Repo Transactions would be assessed the proposed position management fees, just like overnight Repo Transactions and buy/sell transactions.\29\ --------------------------------------------------------------------------- \27\ Id. \28\ Id. The term ``Term Repo Transaction'' means, on any particular business day, a Repo Transaction for which settlement of the close leg is scheduled to occur two or more business days after the scheduled settlement of the start leg. See GSD Rule 1, Definitions, GSD Rules, supra note 5. \29\ Notice, 83 FR at 20885. --------------------------------------------------------------------------- Additionally, FICC would eliminate fees applicable to additional accounts from current Section V of the GSD Fee Structure.\30\ FICC currently differentiates its fees based on whether an account is a Member's primary or secondary account. FICC would no longer draw this distinction. FICC states that eliminating fees applicable to additional accounts would reduce pricing complexity and thereby enhance pricing transparency because Members would no longer need to keep track of their primary versus secondary accounts. --------------------------------------------------------------------------- \30\ Id. --------------------------------------------------------------------------- 4. Conforming, Clarifying, and Technical Changes As described below, FICC proposes to make a number of conforming, clarifying, and technical changes. First, FICC would rename the heading of Section I of the GSD Fee Structure from ``Trade Comparison Fees'' to ``Transaction Fees.'' \31\ FICC states that this would better reflect the proposed changes to that section, as described above.\32\ --------------------------------------------------------------------------- \31\ Id. at 20886. \32\ Id. --------------------------------------------------------------------------- FICC would rename the heading of Section I.A. of the GSD Fee Structure from ``Trade Submission'' to ``Transaction Processing.'' \33\ In addition, FICC would make changes throughout Section I.A. of the GSD Fee Structure to clarify that references to a ``trade'' means a ``buy/ sell transaction.'' \34\ FICC would also make a number of conforming changes in Section I.A. of the GSD Fee Structure.\35\ Specifically, FICC would delete a reference to ``submission fee'' and replace it with ``processing fee.'' \36\ FICC would update the reference to ``subsection D'' to reflect the proposed re-lettering of that subsection.\37\ --------------------------------------------------------------------------- \33\ Id. \34\ Id. \35\ Id. \36\ Id. \37\ Id. --------------------------------------------------------------------------- Additionally, FICC would update the format of (i) the ``$.50'' rejection fee to ``$0.50'' in Section I.A. of the GSD Fee Structure; (ii) the ``15 cents'' yield-to-price conversion charge to ``$0.15'' in the proposed Section I.B. of the GSD Fee Structure; (iii) the ``25 cents'' and ``5 [[Page 27814]] cents'' modification/cancellation fees to ``$0.25'' and ``$0.05,'' respectively, in the proposed Section I.C. of the GSD Fee Structure; (iv) the ``25 cents'' coupon pass-through fee to ``$0.25'' in the proposed Section I.D. of the GSD Fee Structure; (v) the ``$.75'' repurchase agreement collateral substitution fee to ``$0.75'' in the proposed Section I.E. of the GSD Fee Structure; (vi) the ``$.07'' and ``$.025'' recording fees to ``$0.07'' and ``$0.025'' in the proposed Section I.G. of the GSD Fee Structure; and (vii) the ``$.07'' recording fee to ``$0.07'' in the proposed Section I.H. of the GSD Fee Restructure, in order to be consistent with the format of the other fees in the GSD Fee Structure.\38\ --------------------------------------------------------------------------- \38\ Id. --------------------------------------------------------------------------- FICC states that for better organization of the GSD Fee Structure, FICC would relocate current Sections III.B. (Auction Takedown Process), III.F. (Coupon Pass-Through Fee), and III.G. (Repo Collateral Substitution Fees), which cover fees associated with the Auction Takedown Service, pass-through of coupon payments, and the processing of repurchase agreement collateral substitution requests, to proposed Sections I.F., I.D., and I.E., respectively, of the GSD Fee Structure because each of these fees is a type of transaction fee.\39\ --------------------------------------------------------------------------- \39\ Id. --------------------------------------------------------------------------- In addition, FICC would revise the section on Auction Takedown Process (proposed Section I.D. of the GSD Fee Structure) by replacing the words ``locked-in trades'' with ``buy/sell transactions'' because, FICC states, all trades associated with the Auction Takedown Service are locked-in.\40\ FICC would change this section to reflect that, instead of the ``Trade Submission'' fees, fees for trades associated with the Auction Takedown Service would include the proposed ``Transaction Processing'' fees in Section I.A. of the GSD Fee Structure and the proposed ``Position Management Fees'' in Section II of the GSD Fee Structure.\41\ --------------------------------------------------------------------------- \40\ Id. \41\ Id. --------------------------------------------------------------------------- FICC would make a conforming change in the proposed Section I.G. of the GSD Fee Structure by deleting the reference to ``Trade Submission'' fee schedule and replacing it with ``Transaction Processing'' fees.\42\ --------------------------------------------------------------------------- \42\ Id. --------------------------------------------------------------------------- FICC would renumber current Section II of the GSD Fee Structure to proposed Section III of the GSD Fee Structure.\43\ --------------------------------------------------------------------------- \43\ Id. --------------------------------------------------------------------------- FICC would rename the heading of renumbered Section IV of the GSD Fee Structure from ``Netting Fee and Charges (in addition to the comparison fee)'' to ``Other Charges (in addition to the transaction fees)'' to, FICC states, better reflect the proposed changes to this section, as described above.\44\ --------------------------------------------------------------------------- \44\ Id. --------------------------------------------------------------------------- As described above, FICC would relocate current Sections III.B. (Auction Takedown Process), III.F. (Coupon Pass-Through Fee), and III.G. (Repo Collateral Substitution Fees) to proposed Sections I.F., I.D., and I.E., respectively, of the GSD Fee Structure.\45\ These proposed changes would necessitate a re-lettering of all subsequent provisions in renumbered Section IV of the GSD Fee Structure.\46\ --------------------------------------------------------------------------- \45\ Id. \46\ Id. --------------------------------------------------------------------------- In addition, FICC would rename the heading of renumbered Section IV.C. of the GSD Fee Structure from ``Repo Transaction Processing Fee'' to ``GCF Repo Transaction and CCIT Transaction Processing Fee'' to better reflect the proposed changes to this section.\47\ FICC would make two conforming changes: (i) Relocate and update the reference to ``Repo Broker'' definition to appear right after the first usage of ``Repo Broker'' in this section; and (ii) reflect the remaining fee in renumbered Section IV.C. of the GSD Fee Structure in a singular form.\48\ --------------------------------------------------------------------------- \47\ Id. \48\ Id. --------------------------------------------------------------------------- In addition, FICC would make a conforming change in renumbered Section IV.D. of the GSD Fee Structure to reflect the proposed renumbering of sections in the GSD Fee Structure by changing a reference from ``Section III'' to ``Section IV.'' \49\ --------------------------------------------------------------------------- \49\ Id. --------------------------------------------------------------------------- FICC would add a sentence to proposed Section V of the GSD Fee Structure that, FICC states, would make it clear to Members that the minimum monthly fee would not apply to an account if the total monthly fees incurred by the account pursuant to Sections I, II (a proposed new section), and IV (renumbered from III) of the GSD Fee Structure exceed $2,500.\50\ --------------------------------------------------------------------------- \50\ Id. --------------------------------------------------------------------------- FICC would make changes in Section VI of the GSD Fee Structure to, FICC states, clarify that references to ``trades'' means ``buy/sell transactions and Repo Transactions.'' \51\ --------------------------------------------------------------------------- \51\ Id. --------------------------------------------------------------------------- FICC would make two changes to Section VII of the GSD Fee Structure. FICC would delete the reference to the fee for additional accounts, which is being eliminated under the proposal.\52\ FICC states that the second change would make it clear that a sponsoring Member would be subject to the minimum monthly fee set forth in proposed Section V of the GSD Fee Structure.\53\ FICC states that this proposed change would make it clear to a sponsoring Member that its sponsoring Member omnibus account would be subject to the minimum monthly fee.\54\ --------------------------------------------------------------------------- \52\ Id. \53\ Id. at 20886-87. \54\ Id. at 20887. --------------------------------------------------------------------------- In current Section VIII of the GSD Fee Structure, FICC would (i) make a technical change to reflect the reference to the GSD Fee Structure as ``Fee Structure'' instead of ``fee structure,'' and (ii) make changes to clarify that references to a ``trade'' means a ``buy/ sell transaction.'' \55\ In addition, FICC would clarify that a CCIT Transaction, like a Term GCF Repo Transaction, would be considered to have one Start Leg and one Close Leg during its term.\56\ --------------------------------------------------------------------------- \55\ Id. \56\ Id. --------------------------------------------------------------------------- FICC would make a conforming change in current Section XII of the GSD Fee Structure by deleting the reference to ``comparison and netting fees'' and replacing it with ``transaction fees.'' \57\ In addition, FICC would make a technical change by deleting the outdated reference to ``Operations and Planning Committee'' and replacing it with Board, which is defined in GSD Rule 1 (Definitions) as ``the Board of Directors of Fixed Income Clearing Corporation or a committee thereof acting under delegated authority.'' \58\ --------------------------------------------------------------------------- \57\ Id. \58\ Id.; see GSD Rule 1, GSD Rules, supra note 5. --------------------------------------------------------------------------- FICC plans to implement all of the above proposed changes on July 2, 2018.\59\ --------------------------------------------------------------------------- \59\ Id. at 20887. --------------------------------------------------------------------------- II. Summary of Comment Received The Commission received one comment letter to the proposed rule change.\60\ The Nasdaq Letter supports the proposed rule change. Specifically, Nasdaq states that it ``supports the [proposed rule change] because it: (1) Simplifies and adds transparency to FICC's fee schedule; (2) introduces a sensible risk-based fee model; and (3) permits and incentivizes more market participants to utilize central clearing for U.S. Treasury Securities. . . .'' \61\ Nasdaq further states that the proposed rule change would likely result in more widespread use of FICC's central clearing services, reducing systemic risk by moving the industry closer to comprehensive central clearing.\62\ Nasdaq states that more widespread industry use of FICC's central clearing [[Page 27815]] services would also increase overall transparency of trade reporting data of U.S. Treasury securities.\63\ Additionally, Nasdaq believes that the proposed rule change would advance the goals articulated in the October 2017 report by the U.S. Department of the Treasury on U.S. Capital Markets \64\ by reforming FICC's fee structure to make it more simple, clear, transparent, and understandable to market participants and regulators.\65\ --------------------------------------------------------------------------- \60\ Nasdaq Letter, supra note 4. \61\ Id. at 1. \62\ Id. at 1-2. \63\ Id. at 2. \64\ See U.S. Department of the Treasury, A Financial System That Creates Economic Opportunities: Capital Markets (October 2017), available at https://www.treasury.gov/press-center/press-releases/Documents/A-Financial-System-Capital-Markets-FINAL-FINAL.pdf. \65\ Nasdaq Letter at 1-2. --------------------------------------------------------------------------- III. Discussion and Commission Findings Section 19(b)(2)(C) of the Act directs the Commission to approve a proposed rule change of a self-regulatory organization if it finds that such proposed rule change is consistent with the requirements of the Act and rules and regulations thereunder applicable to such organization.\66\ After carefully considering the proposed rule change and the comment letter received, the Commission finds that the proposed rule change is consistent with Act, specifically Sections 17A(b)(3)(D) \67\ and 17A(b)(3)(F) \68\ of the Act and Rule 17Ad-22(e)(23)(ii) \69\ under the Act. --------------------------------------------------------------------------- \66\ 15 U.S.C. 78s(b)(2)(C). \67\ 15 U.S.C. 78q-1(b)(3)(D). \68\ 15 U.S.C. 78q-1(b)(3)(F). \69\ 17 CFR 240.17Ad-22(e)(23)(ii). --------------------------------------------------------------------------- A. Section 17A(b)(3)(D) of the Act Section 17A(b)(3)(D) of the Act requires that the rules of a clearing agency, such as FICC, provide for the equitable allocation of reasonable dues, fees, and other charges among its participants.\70\ --------------------------------------------------------------------------- \70\ 15 U.S.C. 78q-1(b)(3)(D). --------------------------------------------------------------------------- As discussed above, the proposed rule change would make a number of changes to the GSD Fee Structure. Specifically, FICC would, in effect, create 4 new fees, modify 1 existing fee, and eliminate 12 fees. The proposed fee changes are designed, in part, to (i) shift the GSD Fee Structure regarding the DVP service away from a transaction or volume- driven approach to a more position-based approach, and (ii) align GSD's revenue with the approximate 30/70 split between transaction processing and position management costs, respectively. Despite the proposed changes, FICC expects GSD's net revenue to remain relatively unchanged as a result of this proposal. The Commission believes that adding the 4 proposed fees and eliminating the 12 existing fees is equitable and reasonable because these changes are designed to apply to all Members in a manner that better aligns the fees (i.e., fees associated with the DVP service as well as the minimum monthly fee) with the costs attributed to GSD's management of Members' DVP positions and account monitoring. Under the proposed changes, a Member whose DVP positions result in higher position management costs to GSD would be charged a relatively higher fee because the higher fee would be reflective of the higher costs to GSD in managing those positions. On the other hand, a Member whose DVP positions require less management by GSD would be charged a lower fee because the lower fee would be reflective of the lower costs to GSD in managing those positions. In addition, taken collectively, the proposed fee changes are designed to maintain GSD's existing revenue derived from fees associated with the DVP service. With respect to the proposed modification to the minimum monthly fee, each account of every comparison-only Member and every netting Member would be subject to a minimum monthly fee of $2,500. This proposed fee is designed to be commensurate with the minimum costs to FICC associated with monitoring a Member's account. Therefore, for the above reasons, the Commission believes that the proposed rule change is consistent with Section 17A(b)(3)(D) of the Act, as the proposal would provide for the equitable allocation of reasonable dues, fees, and other charges among Members. B. Section 17A(b)(3)(F) of the Act Section 17A(b)(3)(F) of the Act requires, in part, that the rules of a clearing agency, such as FICC, be designed to promote the prompt and accurate clearance and settlement of securities transactions.\71\ --------------------------------------------------------------------------- \71\ 15 U.S.C. 78q-1(b)(3)(F). --------------------------------------------------------------------------- As described above, FICC proposes to, effectively, establish 4 new fees, modify 1 existing fee, eliminate 12 fees, and make conforming, clarifying, and technical changes to the GSD Rules. These proposed changes are designed to reduce the complexity of the GSD Fee Structure by helping to ensure that the GSD Fee Structure is more transparent and clear to Members.\72\ Providing more transparent and clear terms and descriptions in the GSD Fee Structure would help Members better understand GSD's fees and provide increased predictability and certainty regarding the fees Members incur. This increased understanding, predictability, and certainty could, in turn, help Members satisfy their obligations to FICC more easily, which would help promote the prompt and accurate clearance and settlement of securities transactions.\73\ Accordingly, the Commission believes that the proposed rule change is consistent with the requirements of Section 17A(b)(3)(F) of the Act. --------------------------------------------------------------------------- \72\ See also Nasdaq Letter at 1-2 (supporting the proposed rule change because it renders FICC's fee schedule more simple, clear, transparent, and understandable to market participants). \73\ See also Nasdaq Letter at 2 (arguing that FICC's efforts to simplify its fee structure would encourage more widespread central clearing among market participants). --------------------------------------------------------------------------- C. Rule 17Ad-22(e)(23)(ii) Under the Act Rule 17Ad-22(e)(23)(ii) under the Act requires each covered clearing agency \74\ 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 the covered clearing agency.\75\ --------------------------------------------------------------------------- \74\ A ``covered clearing agency'' means, among other things, a clearing agency registered with the Commission under Section 17A of the Exchange Act (15 U.S.C. 78q-1 et seq.) that is designated systemically important by Financial Stability Oversight Council (``FSOC'') pursuant to the Clearing Supervision Act (12 U.S.C. 5461 et seq.). See 17 CFR 240.17Ad-22(a)(5)-(6). Because FICC is a registered clearing agency with the Commission that has been designated systemically important by FSOC, FICC is a covered clearing agency. \75\ 17 CFR 240.17Ad-22(e)(23)(ii). --------------------------------------------------------------------------- As described above, FICC proposes to, effectively, establish 4 new fees, modify 1 existing fee, eliminate 12 fees, and make conforming, clarifying, and technical changes to the GSD Rules. These proposed changes are designed to reduce the complexity of the GSD Fee Structure by helping to ensure that the GSD Fee Structure is more transparent and clear to Members. Having a more transparent and clear GSD Fee Structure would help Members and other stakeholders to better understand GSD's fees and help provide Members with increased predictability and certainty regarding the fees they incur in participating in GSD.\76\ As such, the Commission believes that the proposed rule change is consistent with Rule 17Ad-22(e)(23)(ii) under the Act. --------------------------------------------------------------------------- \76\ See also Nasdaq Letter at 1-2 (supporting the proposed rule change because it renders FICC's fee schedule more simple, clear, transparent, and understandable to market participants). --------------------------------------------------------------------------- IV. Conclusion On the basis of the foregoing, the Commission finds that the proposal is consistent with the requirements of the [[Page 27816]] Act, in particular the requirements of Section 17A of the Act \77\ and the rules and regulations thereunder. --------------------------------------------------------------------------- \77\ 15 U.S.C. 78q-1. --------------------------------------------------------------------------- It is therefore ordered, pursuant to Section 19(b)(2) of the Act, that proposed rule change SR-FICC-2018-003 be, and hereby is, Approved.\78\ --------------------------------------------------------------------------- \78\ In approving the proposed rule change, the Commission considered the proposals' impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\79\ --------------------------------------------------------------------------- \79\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-12754 Filed 6-13-18; 8:45 am] BILLING CODE 8011-01-P
![27812 Federal Register / Vol. 83, No. 115 / Thursday, June 14, 2018 / Notices
III. Date of Effectiveness of the available for website viewing and Commission approves the proposed rule
Proposed Rule Change and Timing for printing in the Commission’s Public change.
Commission Action Reference Room, 100 F Street NE,
Washington, DC 20549 on official I. Description of the Proposed Rule
The foregoing rule change has become Change
effective pursuant to Section business days between the hours of
19(b)(3)(A)(ii) of the Exchange Act 12 10:00 a.m. and 3:00 p.m. Copies of such The proposed rule change would
and Rule 19b–4(f)(2) thereunder,13 filing also will be available for amend the FICC Government Securities
because it establishes or changes a due, inspection and copying at the principal Division (‘‘GSD’’) Rulebook (‘‘GSD
or fee. office of the Exchange. All comments Rules’’) 5 to modify the GSD Fee
At any time within 60 days of the received will be posted without change. Structure. FICC states that it designed
filing of the proposed rule change, the Persons submitting comments are the proposed rule change to reduce
Commission summarily may cautioned that we do not redact or edit complexity and to better align pricing
temporarily suspend the rule change if personal identifying information from with the costs of services provided by
it appears to the Commission that the comment submissions. You should GSD.6 More specifically, FICC states
action is necessary or appropriate in the submit only information that you wish that the transaction processing fees and
public interest, for the protection of to make available publicly. All the position management fees associated
investors, or would otherwise further submissions should refer to File with the delivery-versus-payment
the purposes of the Act. If the Number SR–BOX–2018–21, and should (‘‘DVP’’) service account for
Commission takes such action, the be submitted on or before July 5, 2018. approximately 30 percent and 70
Commission shall institute proceedings For the Commission, by the Division of percent, respectively, of GSD’s projected
to determine whether the proposed rule Trading and Markets, pursuant to delegated costs from the DVP service.7
should be approved or disapproved. authority.14 Accordingly, FICC states that the
IV. Solicitation of Comments Eduardo A. Aleman, proposed fee changes are designed to
Assistant Secretary. align GSD’s revenue with that 30/70
Interested persons are invited to
submit written data, views, and [FR Doc. 2018–12751 Filed 6–13–18; 8:45 am] percent split between transaction
arguments concerning the foregoing, processing and position management
BILLING CODE 8011–01–P
including whether the proposed rule costs, respectively.8 In doing so, FICC
change is consistent with the Act. would shift the GSD Fee Structure
Comments may be submitted by any of SECURITIES AND EXCHANGE regarding the DVP service away from
the following methods: COMMISSION the existing volume-driven approach to
a position-based approach.9 Ultimately,
Electronic Comments FICC expects GSD’s net revenue to
[Release No. 34–83401; File No. SR–FICC–
• Use the Commission’s internet 2018–003]
remain relatively unchanged as a result
comment form (http://www.sec.gov/ of this proposal.10
rules/sro.shtml); or Self-Regulatory Organizations; Fixed A. Proposed Changes to the GSD Fee
• Send an email to rule-comments@ Income Clearing Corporation; Order Structure
sec.gov. Please include File Number SR– Approving Proposed Rule Change To
BOX–2018–21 on the subject line. Amend the Fee Structure of the The proposed GSD Fee Structure
Paper Comments Government Securities Division would, in effect, establish 4 new fees,
Rulebook modify 1 existing fee, and eliminate 12
• Send paper comments in triplicate fees.11 These proposed changes are
to Secretary, Securities and Exchange June 8, 2018. summarized below.
Commission, 100 F Street NE,
Washington, DC 20549–1090. On April 27, 2018, Fixed Income 1. New Fees
Clearing Corporation (‘‘FICC’’) filed
All submissions should refer to File
Number SR–BOX–2018–21. This file with the Securities and Exchange In proposed Section I of the GSD Fee
number should be included on the Commission (‘‘Commission’’) proposed Structure, FICC would replace the
subject line if email is used. To help the rule change SR–FICC–2018–003, seven-tiered trade submission fees for
Commission process and review your pursuant to Section 19(b)(1) of the both dealer accounts and broker
comments more efficiently, please use Securities Exchange Act of 1934 accounts with a single transaction
only one method. The Commission will (‘‘Act’’) 1 and Rule 19b–4 thereunder.2 processing fee that would be charged to
post all comments on the Commission’s The proposed rule change was GSD members (‘‘Members’’) upon the
internet website (http://www.sec.gov/ published for comment in the Federal comparison of a side of a buy/sell
rules/sro.shtml). Copies of the Register on May 8, 2018.3 The transaction or a Repo Transaction in the
submission, all subsequent Commission received one comment DVP service.12 Specifically, dealer
amendments, all written statements letter on the proposed rule change.4 For accounts would be charged a fee of
with respect to the proposed rule the reasons discussed below, the $0.04 per million par value for
change that are filed with the transaction processing, and broker
Commission, and all written
14 17 CFR 200.30–3(a)(12). accounts would be charged a fee of
1 15 U.S.C. 78s(b)(1).
communications relating to the 2 17 CFR 240.19b–4.
5 Available at http://www.dtcc.com/legal/rules-
proposed rule change between the
daltland on DSKBBV9HB2PROD with NOTICES
3 Securities Exchange Act Release No. 83153 (May
and-procedures.
Commission and any person, other than 2, 2018), 83 FR 20882 (May 8, 2018) (SR–FICC– 6 Notice, 83 FR at 20882.
those that may be withheld from the 2018–003) (‘‘Notice’’). 7 Id. at 20884.
4 Letter from Ted Bragg, Vice President—Head of
public in accordance with the 8 Id.
U.S. Fixed Income, Nasdaq (‘‘Nasdaq’’), dated May
provisions of 5 U.S.C. 552, will be 14, 2018, to Eduardo A. Aleman, Assistant
9 Id.
10 Id.
Secretary, Commission (‘‘Nasdaq Letter’’) available
12 15 U.S.C. 78s(b)(3)(A)(ii). 11 Id.
at https://www.sec.gov/comments/sr-ficc-2018-003/
13 17 CFR 240.19b–4(f)(2). ficc2018003.htm. 12 Id.
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![27814 Federal Register / Vol. 83, No. 115 / Thursday, June 14, 2018 / Notices
cents’’ modification/cancellation fees to Charges (in addition to the comparison Member would be subject to the
‘‘$0.25’’ and ‘‘$0.05,’’ respectively, in fee)’’ to ‘‘Other Charges (in addition to minimum monthly fee set forth in
the proposed Section I.C. of the GSD Fee the transaction fees)’’ to, FICC states, proposed Section V of the GSD Fee
Structure; (iv) the ‘‘25 cents’’ coupon better reflect the proposed changes to Structure.53 FICC states that this
pass-through fee to ‘‘$0.25’’ in the this section, as described above.44 proposed change would make it clear to
proposed Section I.D. of the GSD Fee As described above, FICC would a sponsoring Member that its sponsoring
Structure; (v) the ‘‘$.75’’ repurchase relocate current Sections III.B. (Auction Member omnibus account would be
agreement collateral substitution fee to Takedown Process), III.F. (Coupon Pass- subject to the minimum monthly fee.54
‘‘$0.75’’ in the proposed Section I.E. of Through Fee), and III.G. (Repo Collateral In current Section VIII of the GSD Fee
the GSD Fee Structure; (vi) the ‘‘$.07’’ Substitution Fees) to proposed Sections Structure, FICC would (i) make a
and ‘‘$.025’’ recording fees to ‘‘$0.07’’ I.F., I.D., and I.E., respectively, of the technical change to reflect the reference
and ‘‘$0.025’’ in the proposed Section GSD Fee Structure.45 These proposed to the GSD Fee Structure as ‘‘Fee
I.G. of the GSD Fee Structure; and (vii) changes would necessitate a re-lettering Structure’’ instead of ‘‘fee structure,’’
the ‘‘$.07’’ recording fee to ‘‘$0.07’’ in of all subsequent provisions in and (ii) make changes to clarify that
the proposed Section I.H. of the GSD renumbered Section IV of the GSD Fee references to a ‘‘trade’’ means a ‘‘buy/
Fee Restructure, in order to be Structure.46 sell transaction.’’ 55 In addition, FICC
consistent with the format of the other In addition, FICC would rename the would clarify that a CCIT Transaction,
fees in the GSD Fee Structure.38 heading of renumbered Section IV.C. of like a Term GCF Repo Transaction,
FICC states that for better organization the GSD Fee Structure from ‘‘Repo would be considered to have one Start
of the GSD Fee Structure, FICC would Transaction Processing Fee’’ to ‘‘GCF Leg and one Close Leg during its term.56
relocate current Sections III.B. (Auction Repo Transaction and CCIT Transaction FICC would make a conforming
Takedown Process), III.F. (Coupon Pass- Processing Fee’’ to better reflect the change in current Section XII of the GSD
Through Fee), and III.G. (Repo Collateral proposed changes to this section.47 FICC Fee Structure by deleting the reference
Substitution Fees), which cover fees would make two conforming changes: to ‘‘comparison and netting fees’’ and
associated with the Auction Takedown (i) Relocate and update the reference to replacing it with ‘‘transaction fees.’’ 57 In
Service, pass-through of coupon ‘‘Repo Broker’’ definition to appear right addition, FICC would make a technical
payments, and the processing of after the first usage of ‘‘Repo Broker’’ in change by deleting the outdated
repurchase agreement collateral this section; and (ii) reflect the reference to ‘‘Operations and Planning
substitution requests, to proposed remaining fee in renumbered Section Committee’’ and replacing it with
Sections I.F., I.D., and I.E., respectively, IV.C. of the GSD Fee Structure in a Board, which is defined in GSD Rule 1
of the GSD Fee Structure because each singular form.48 (Definitions) as ‘‘the Board of Directors
In addition, FICC would make a of Fixed Income Clearing Corporation or
of these fees is a type of transaction
conforming change in renumbered a committee thereof acting under
fee.39
In addition, FICC would revise the Section IV.D. of the GSD Fee Structure delegated authority.’’ 58
to reflect the proposed renumbering of FICC plans to implement all of the
section on Auction Takedown Process
sections in the GSD Fee Structure by above proposed changes on July 2,
(proposed Section I.D. of the GSD Fee
changing a reference from ‘‘Section III’’ 2018.59
Structure) by replacing the words
to ‘‘Section IV.’’ 49
‘‘locked-in trades’’ with ‘‘buy/sell FICC would add a sentence to II. Summary of Comment Received
transactions’’ because, FICC states, all proposed Section V of the GSD Fee The Commission received one
trades associated with the Auction Structure that, FICC states, would make comment letter to the proposed rule
Takedown Service are locked-in.40 FICC it clear to Members that the minimum change.60 The Nasdaq Letter supports
would change this section to reflect that, monthly fee would not apply to an the proposed rule change. Specifically,
instead of the ‘‘Trade Submission’’ fees, account if the total monthly fees Nasdaq states that it ‘‘supports the
fees for trades associated with the incurred by the account pursuant to [proposed rule change] because it: (1)
Auction Takedown Service would Sections I, II (a proposed new section), Simplifies and adds transparency to
include the proposed ‘‘Transaction and IV (renumbered from III) of the GSD FICC’s fee schedule; (2) introduces a
Processing’’ fees in Section I.A. of the Fee Structure exceed $2,500.50 sensible risk-based fee model; and (3)
GSD Fee Structure and the proposed FICC would make changes in Section permits and incentivizes more market
‘‘Position Management Fees’’ in Section VI of the GSD Fee Structure to, FICC participants to utilize central clearing
II of the GSD Fee Structure.41 states, clarify that references to ‘‘trades’’ for U.S. Treasury Securities. . . .’’ 61
FICC would make a conforming means ‘‘buy/sell transactions and Repo Nasdaq further states that the proposed
change in the proposed Section I.G. of Transactions.’’ 51 rule change would likely result in more
the GSD Fee Structure by deleting the FICC would make two changes to widespread use of FICC’s central
reference to ‘‘Trade Submission’’ fee Section VII of the GSD Fee Structure. clearing services, reducing systemic risk
schedule and replacing it with FICC would delete the reference to the by moving the industry closer to
‘‘Transaction Processing’’ fees.42 fee for additional accounts, which is comprehensive central clearing.62
FICC would renumber current Section being eliminated under the proposal.52 Nasdaq states that more widespread
II of the GSD Fee Structure to proposed FICC states that the second change industry use of FICC’s central clearing
Section III of the GSD Fee Structure.43 would make it clear that a sponsoring
FICC would rename the heading of 53 Id. at 20886–87.
renumbered Section IV of the GSD Fee 44 Id. 54 Id. at 20887.
daltland on DSKBBV9HB2PROD with NOTICES
Structure from ‘‘Netting Fee and 45 Id. 55 Id.
46 Id. 56 Id.
38 Id. 47 Id. 57 Id.
39 Id. 48 Id. 58 Id.; see GSD Rule 1, GSD Rules, supra note 5.
40 Id. 49 Id. 59 Id. at 20887.
41 Id. 50 Id. 60 Nasdaq Letter, supra note 4.
42 Id. 51 Id. 61 Id. at 1.
43 Id. 52 Id. 62 Id. at 1–2.
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![27816 Federal Register / Vol. 83, No. 115 / Thursday, June 14, 2018 / Notices
Act, in particular the requirements of Whether a Medically Determinable that we will not find an individual
Section 17A of the Act 77 and the rules Impairment is Severe. disabled based on alleged symptoms
and regulations thereunder. • SSR 96–4p: Titles II and XVI: alone. Therefore, the information
It is therefore ordered, pursuant to Symptoms, Medically Determinable contained in SSR 96–4p duplicates
Section 19(b)(2) of the Act, that Physical and Mental Impairments, and policy in SSR 16–3p. Consequently, we
proposed rule change SR–FICC–2018– Exertional and Nonexertional are rescinding SSRs 96–3p and 96–4p.
003 be, and hereby is, Approved.78 Limitations. (Catalog of Federal Domestic Assistance,
For the Commission, by the Division of These SSRs are unnecessarily Programs Nos. 96.001, Social Security—
Trading and Markets, pursuant to delegated duplicative of SSR 16–3p Titles II and Disability Insurance; 96.002, Social
authority.79 XVI: Evaluation of Symptoms in Security— Retirement Insurance; 96.004,
Eduardo A. Aleman, Disability Claims, which was applicable Social Security—Survivors Insurance;
on March 28, 2016, published in the 96.006—Supplemental Security Income.)
Assistant Secretary.
Federal Register on March 16, 2016, 81 Nancy A. Berryhill,
[FR Doc. 2018–12754 Filed 6–13–18; 8:45 am]
FR 14166.1 SSR 16–3p, a more
BILLING CODE 8011–01–P Acting Commissioner of Social Security.
comprehensive statement of our policy
[FR Doc. 2018–12820 Filed 6–13–18; 8:45 am]
on symptoms, explains how we evaluate
BILLING CODE 4191–02–P
the extent to which alleged symptoms
SOCIAL SECURITY ADMINISTRATION limit an adult’s ability to perform work-
[Docket No. SSA–2017–0030] related activities and a child’s ability to
SOCIAL SECURITY ADMINISTRATION
function effectively in an age-
Social Security Rulings (SSRs) 96–3p appropriate manner. [Docket No. SSA–2015–0003]
and 96–4p; Rescission of SSRs 96–3p SSR 96–3p clarified how adjudicators
and 96–4p should consider allegations of pain and Privacy Act of 1974; System of
other symptoms in determining whether Records
AGENCY: Social Security Administration.
a medically determinable impairment AGENCY: Deputy Commissioner of
ACTION: Notice of rescission of SSRs. (MDI) is severe. SSR 16–3p explains our Budget, Finance, and Management,
SUMMARY: We give notice of the two-step process for evaluating an Social Security Administration (SSA).
rescission of SSRs 96–3p and 96–4p. individual’s symptoms where, at the ACTION: Notice of a new system of
first step, we determine whether the records.
DATES: We will apply this rescission
individual has an MDI that could
notice on June 14, 2018. reasonably be expected to produce the SUMMARY: In accordance with the
FOR FURTHER INFORMATION CONTACT: Dan individual’s alleged symptoms. At the Privacy Act, we are issuing public
O’Brien, Office of Vocational, second step, we evaluate the intensity notice of our intent to establish a new
Evaluation, and Process Policy in the and persistence of an individual’s system of records entitled, Social
Office of Disability Policy, Social symptoms such as pain and determine Security Administration Violence
Security Administration, 6401 Security the extent to which an individual’s Evaluation and Reporting System
Boulevard, Baltimore, MD 21235–6401, symptoms limit his or her ability to (SSAvers) (60–0379). We are
(410) 597–1632. For information on perform work-related activities for an establishing SSAvers to cover
eligibility or filing for benefits, call our adult or to function independently, information we collect about employees,
national toll-free number, 1–800–772– appropriately, and effectively in an age- contractors, and members of the public
1213 or visit our internet site, Social appropriate manner for a child with a who are allegedly involved in, or
Security Online, at http:// title XVI disability claim. SSR 16–3p witness incidents of, workplace and
www.socialsecurity.gov. explains that we will consider domestic violence.
SUPPLEMENTARY INFORMATION: We use symptoms and functional limitations to DATES: The System of Records Notice
SSRs to make available to the public determine whether an impairment is (SORN) is applicable upon its
precedential decisions relating to the severe unless the objective medical publication in today’s Federal Register,
Federal old-age, survivors, disability, evidence alone establishes a severe MDI with the exception of the routine uses
supplemental security income, and or combination of impairments that which are effective July 16, 2018. We
special veterans benefits programs. We meets our duration requirement. invite public comment on the routine
may base SSRs on determinations or Therefore, the information contained in uses or other aspects of this SORN. In
decisions made in our administrative SSR 96–3p duplicates policy in SSR 16– accordance with 5 U.S.C. 552a(e)(4) and
review process, Federal court decisions, 3p. (e)(11), the public is given a 30-day
decisions of our Commissioner, SSR 96–4p explained that no period in which to submit comments.
opinions from our Office of the General symptom, by itself, could establish the Therefore, please submit any comments
Counsel, or other interpretations of law existence of a medically determinable by July 16, 2018.
and regulations. physical or mental impairment. In SSR ADDRESSES: The public, Office of
In accordance with 20 CFR 16–3p, we clarified that an individual’s Management and Budget (OMB), and
402.35(b)(1), we give notice that we are symptoms alone are not enough to Congress may comment on this
rescinding the following SSRs: establish the existence of a physical or publication by writing to the Executive
• SSR 96–3p: Titles II and XVI: mental impairment or disability, and Director, Office of Privacy and
Considering Allegations of Pain and Disclosure, Office of the General
daltland on DSKBBV9HB2PROD with NOTICES
1 On March 24, 2016, we published a correction
Other Symptoms in Determining Counsel, SSA, Room G–401 West High
notice in the Federal Register that amended and
corrected the effective date of SSR 16–3p (81 FR Rise, 6401 Security Boulevard,
77 15 U.S.C. 78q–1. 15776). On October 25, 2017, we published a notice Baltimore, Maryland 21235–6401, or
78 In approving the proposed rule change, the of Social Security Ruling in the Federal Register through the Federal e-Rulemaking Portal
Commission considered the proposals’ impact on that changes the ‘‘effective date’’ to ‘‘applicable
efficiency, competition, and capital formation. 15 date’’ and revises the Social Security Ruling to
at http://www.regulations.gov, please
U.S.C. 78c(f). explain how we apply the Ruling as it relates to the reference docket number SSA–2015–
79 17 CFR 200.30–3(a)(12). applicable date (82 FR 49462). 0003. All comments we receive will be
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Document Created: 2018-06-14 01:39:05
Document Modified: 2018-06-14 01:39:05
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| Section | Notices | |
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