[Federal Register Volume 88, Number 137 (Wednesday, July 19, 2023)]
[Notices]
[Pages 46293-46313]
[FR Doc No: 2023-15265]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97897; File No. SR-FICC-2023-009]

Self-Regulatory Organizations; Fixed Income Clearing Corporation;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Modify the GSD Rules, MBSD Rules, and EPN Rules

July 13, 2023.
    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 July 6, 2023, 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)(6) 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)(6).
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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 modifications to the FICC
Government Securities Division (``GSD'') Rulebook (``GSD Rules''), the
FICC Mortgage-Backed Securities Division (``MBSD'') Clearing Rules
(``MBSD Rules'') and the FICC MBSD EPN Rules (``EPN Rules,'' and
together with the GSD Rules and the MBSD Rules, the ``Rules'') \5\ in
order to make certain corrections, clarifications, and technical
changes to the Rules, each as described in more detail below.
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    \5\ Capitalized terms used herein and not defined shall have the
meanings assigned to such terms in the GSD Rules, MBSD Rules and EPN
Rules, as applicable, available at https://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
    FICC is proposing to make certain corrections, clarifications, and
technical changes to the Rules, each as described in more detail below.
A. Corrections
1. Correct Uses of Defined Terms
Proposed Changes To Reflect Existing Defined Terms
    FICC is proposing to correct the following references to reflect
the existing defined terms:
     In GSD Rule 6C, Section 12, FICC proposes to revise ``GCF
Inter-Dealer Broker'' to ``GCF-Authorized Inter-Dealer Broker.''
     In GSD Rule 11, Section 14, FICC proposes to revise
references from ``defaulting Member'' to ``Defaulting Member.''
     In GSD Rule 12, Section 4, FICC proposes to revise
``Actual Settlement Day'' to ``Actual Settlement Date.''
     In GSD Rule 12, Section 4 and GSD Rule 14, Section 3, FICC
proposes to revise ``Scheduled Settlement Day'' to ``Scheduled
Settlement Date.''
     In GSD Rule 18, Section 3, FICC proposes to revise the
reference from ``Generic CUSIP'' to ``Generic CUSIP Number.''
     In the Schedule of Timeframes in the GSD Rules, FICC
proposes to revise ``long position'' to ``Net Long Position'' in the
description of the 9:15 a.m. timeframe.
     In the definition of Current Haircut in GSD Rule 1, FICC
proposes to revise ``Close Leg'' to ``End Leg.''
     In the Schedule of Required and Other Data Submission
Items for GCF Repo Transactions, FICC proposes to revise ``Close Leg''
to ``End Leg.''
    In addition, in Section IV.B.4 of the Fee Structure of the GSD
Rules, FICC is proposing to remove specific references to ``The Bank of
New York Mellon'' and/or ``BNY,'' and to replace them with references
to either ``the Corporation's Clearing Agent Bank'' or ``the
Corporation's GCF Clearing Agent Bank,'' as applicable. FICC is
proposing this change to use the defined terms rather than the specific
name and/or acronym of the current Clearing Agent Bank and GCF Clearing
Agent Bank if there are other Clearing Agent Banks or GCF Clearing
Agent Banks in the future.
    In the section entitled Late Fee Related to GCF Repo Transactions
in Section IX of the Fee Structure of the GSD Rules, FICC is also
proposing to correct the reference from ``GCF Repo Clearing Agent
Bank'' to ``GCF Clearing Agent Bank'' to reflect the existing defined
term.
    FICC also proposes to revise a reference from ``members'' to
``Netting Members'' in the description of the 9:15 a.m. timeframe in
the Schedule of Timeframes in the GSD Rules to reflect the existing
defined term.
    FICC is also proposing to capitalize the following words to reflect
the existing defined terms in the GSD Rules: (i) ``security'' in GSD
Rule 22A; (ii) ``members'' in the description of the 8:00 p.m.
timeframe in the Schedule of Timeframes; (iii) ``mark'' in the last
sentence of the definition of ``Net Fail Mark Adjustment Payment'' in
GSD Rule 1; (iv) ``collateral allocation obligations'' in GSD Rule 20,
Section 5; (v) ``transactions'' in the Schedule of Required Match Data;
and (vi) ``repo transactions'' in the Schedule of Money Tolerances.
    FICC is also proposing to make the following terms lowercase
because they are not defined terms in the GSD Rules: (i)
``Obligations'' in GSD Rule 16; and (ii) ``Positions'' in GSD Rule 17,
Section 4.
Proposed Changes To Correct References to Titles of Certain Schedules
and Rules
    In GSD Rule 6C, Section 5, FICC is proposing to revise the
reference from Schedule of Data Items for GCF Repo Transactions to
Schedule of Required and Other Data Submission Items for GCF Repo
Transactions. In addition, in GSD Rule 3B, Section 13(d), FICC proposes
to revise the reference from invoicing process to Bills Rendered.
Proposed Changes To Correct References to Terms Not Defined
    In GSD Rule 1, FICC would remove the defined term ``Non-Conversion
Participating Member'' because this defined term is not used in the GSD
Rules.
    In addition, FICC proposes to revise the term ``Conversion
Participating Member'' to ``Member'' in GSD Rule 9, Section 2 because
Conversion Participating Member is not a type of member and is also not
defined in the GSD Rules.
Proposed Changes To Replace References With Correct Defined Terms
    In GSD Rule 13, Section 1, FICC proposes to correct the reference
from Positions to transactions because Credit Forward Mark Adjustment
Payments are

associated with transactions and not Positions.
    Current GSD Rule 12, Section 8 states that if FICC deems it
appropriate, in its sole discretion, in order to obtain financing
necessary for the provision of the securities settlement services
contemplated by the GSD Rules, including, without limitation, fail
financing of securities Positions arising out of the delivery by
Netting Members to FICC of Eligible Netting Securities, FICC may create
security interests in Eligible Netting Securities in favor of any
entity it deems necessary or desirable to obtain and maintain financing
and/or enter into repurchase transactions involving Eligible Netting
Securities with any Netting Member or Clearing Agent Bank. FICC
proposes to correct the reference from ``securities Positions'' to ``an
outstanding Receive Obligation or Receive Obligations'' in current GSD
Rule 12, Section 8 to enhance accuracy, and thereby enhance clarity.
Proposed Changes Related to CCIT Transactions
    The ``CCIT Service'' or the ``Centrally Cleared Institutional
Triparty Service'' is the service offered by FICC to clear
institutional triparty repurchase agreement transactions.\6\ A CCIT
Transaction is a transaction that is processed by FICC in the CCIT
Service. Because the CCIT Service leverages the infrastructure and
processes of the GCF Repo Service, a CCIT Transaction must be: (i) in a
Generic CUSIP Number approved for the GCF Repo Service and (ii) between
a CCIT Member and a Netting Member who participates in the GCF Repo
Service where the CCIT Member is the cash lender in the transaction.\7\
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    \6\ GSD Rule 1, supra note 5.
    \7\ Id.
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    In GSD Rule 1, FICC proposes to correct the definition of Start Leg
to include references to CCIT Transactions as these references were
inadvertently omitted. Specifically, in the first sentence of the
definition of Start Leg, FICC would clarify that it is as regards a
Repo Transaction other than a GCF Repo Transaction or a CCIT
Transaction as applicable. In addition, in the second sentence of the
definition, FICC would clarify that it is as regards a GCF Repo
Transaction or a CCIT Transaction as applicable. FICC is proposing to
add these references to CCIT Transactions because the CCIT Service
leverages the infrastructure and processes of the GCF Repo Service, and
these provisions currently reference GCF Repo Transactions.
    In GSD Rule 1, FICC also proposes to correct the definition of
Generic CUSIP Number to include CCIT Transactions in the second
sentence. Currently, the sentence states that FICC shall use separate
Generic CUSIP Numbers for General Collateral Repo Transactions, GCF
Repo Transactions and Sponsored GC Trades. FICC proposes to revise this
second sentence to state that FICC shall use separate Generic CUSIP
Numbers for General Collateral Repo Transactions, GCF Repo
Transactions, CCIT Transactions and Sponsored GC Trades. FICC is
proposing this change because one of the requirements for a CCIT
Transaction is that it must be in a Generic CUSIP Number approved for
the GCF Repo Service because the CCIT Service leverages the
infrastructure and processes of the GCF Repo Service.
    FICC would also clarify the Schedule of Required Match Data in the
GSD Rules by adding that this schedule does not apply to CCIT
Transactions in addition to Netting-Eligible Auction Purchases and GCF
Repo Transactions. Currently, the Schedule of Required Match Data
states that this schedule does not apply to Netting-Eligible Auction
Purchases and GCF Repo Transactions. Because the CCIT Service leverages
the infrastructure and processes of the GCF Repo Service, FICC proposes
to clarify that this Schedule of Required Match Data in the GSD Rules
also does not apply to CCIT Transactions.
    Similarly, in the Schedule of Required and Accepted Data Submission
Items for New Securities Collateral and in the Schedule of Required and
Accepted Data Submission Items for a Substitution, FICC would clarify
that these schedules also do not apply to CCIT Transactions.
2. Remove ``Foreign Affiliates'' and ``Foreign Affiliate Trade''
    Currently, GSD Rule 3, Section 2 states that on an annual basis,
Netting Members must report information on their Foreign Affiliate
Trades to FICC, and this reporting will be submitted to FICC containing
the information, in the format and within the timeframes specified by
guidelines issued by FICC from time to time. It also states that this
reporting requirement does not apply Foreign Affiliate Trades of a
Foreign Affiliate that has executed less than an average of 30 Foreign
Affiliate Trades per business day per month within the prior twelve-
month period. FICC is proposing to remove this annual reporting
requirement for Foreign Affiliate Trades. Given that non-U.S. firms may
apply for membership with GSD and no longer need to submit trading
activity to FICC for clearing through their U.S. affiliates, the
information provided in this reporting, which is time consuming for
participants to complete, is no longer useful to FICC from a risk
management perspective. Therefore, FICC does not believe that it should
continue to require this reporting and is proposing to remove it from
the GSD Rules.
    In addition, FICC proposes to remove the defined terms ``Foreign
Affiliate'' and ``Foreign Affiliate Trade'' in GSD Rule 1.
3. Correct Outdated Provisions and Reflect Current Practice
Proposed Changes To Remove Fail Net Settlement Position, Fail Net Short
Position and Fail Net Long Position
    FICC is proposing to remove references to Fail Net Settlement
Position, Fail Net Short Position, and Fail Net Long Position because
fails are no longer separately netted, and therefore these defined
terms are outdated. Specifically, FICC would remove the defined terms
``Fail Net Settlement Position,'' ``Fail Net Short Position,'' and
``Fail Net Long Position'' from GSD Rule 1.
    As such, FICC also proposes to revise the definition of ``Fail
Deliver Obligation'' in GSD Rule 1, which currently states that it
means a Deliver Obligation with respect to a Fail Net Short Position;
FICC would revise this definition to state that a Fail Deliver
Obligation means a Deliver Obligation that does not settle on its
original Scheduled Settlement Date. Similarly, FICC would revise the
definition of ``Fail Receive Obligation'' in GSD Rule 1, which
currently states that it means a Receive Obligation with respect to a
Fail Net Long Position; FICC would revise this definition to state that
a Fail Receive Obligation means a Receive Obligation that does not
settle on its original Scheduled Settlement Date.
    FICC would also revise the definitions of Coupon Adjustment
Payment, Credit Coupon Adjustment Payment and Debit Coupon Adjustment
Payment in GSD Rule 1 by replacing the phrases ``or a Fail Net
Settlement Position'' and ``or a fail Net Settlement Position'' with
``Fail Deliver Obligation or Fail Receive Obligation.'' FICC would also
revise the definition of Net Unsettled Positions to remove the phrase
``and Fail Net Settlement Positions.''
    In GSD Rule 3A, FICC would (i) remove the reference to ``Fail Net
Settlement Position'' in Section 8; (ii) remove the references to Fail
Net Settlement Position and replace them with references to Fail
Deliver

Obligation and Fail Receive Obligation in Section 7(a)(iii); and (iii)
remove the references to Fail Net Settlement Positions because this
defined term would be deleted from GSD Rule 1, in Section 18(b).
    In GSD Rule 22A, Section 2(b), FICC proposes to remove the
reference to Fail Net Settlement Positions as well as replace the
phrase ``those that arise from Fail Net Settlement Positions'' with
``Fail Deliver Obligations and Fail Receive Obligations.''
    The Fail Mark Adjustment Payment is the mark-to-market on failing
obligations. It is calculated as the difference between the last
Settlement Value of the obligation that failed to settle and the new
Settlement Value of such obligation. For example, if on April 4, there
is an obligation to receive, which has a Settlement Value of $10 (this
Settlement Value is based on the price in the system at the end of the
day on April 3), and this obligation to receive failed to settle on
April 4, then, at the end of the day on April 4, a new Settlement Value
for this obligation will be generated based on the price in the system
at the end of the day on April 4. In this example, the new Settlement
Value that is generated for this obligation at the end of the day on
April 4 is $11 and the Fail Mark Adjustment Payment is $1 for this
obligation. The Fail Mark Adjustment Payment is the difference between
the Settlement Value of the obligation based on the price from the end
of day (in this example, on April 3) and the new Settlement Value based
on the price from the end of day (in this example, on April 4).
    FICC is not proposing any changes to how the Fail Mark Adjustment
Payment is currently calculated. Rather, FICC is proposing to clarify
the definition of ``Fail Mark Adjustment Payment'' in GSD Rule 1 by
removing the phrase ``that constitutes a Fail Net Settlement Position''
and making other conforming changes because, as described above, fails
are no longer separately netted, and therefore this defined term is
outdated. Currently, Fail Mark Adjustment Payment means the absolute
value of the dollar difference between the Settlement Value of a Fail
Deliver Obligation or a Fail Receive Obligation that constitutes all or
part of a Fail Net Settlement Position on the current Business Day and
the previous Settlement Value of such Fail Deliver Obligation or Fail
Receive Obligation on the immediately previous Business Day. FICC would
revise this definition to state that Fail Mark Adjustment Payment would
mean the absolute value of the dollar difference between the current
Settlement Value of a Fail Deliver Obligation or a Fail Receive
Obligation on the current Business Day, and the previous Settlement
Value of such Deliver Obligation or Receive Obligation.
    In GSD Rule 11, Section 1, FICC also proposes to remove the
references to Fail Net Settlement Positions because, as described
above, this defined term would be deleted from GSD Rule 1.
    Similarly, in GSD Rule 11, Sections 4 and 5, FICC proposes to
remove the phrase ``or Fail Net Settlement Position, as applicable,''
in the first sentence of each section. In addition, in GSD Rule 11,
Section 4, FICC proposes to remove the phrase ``, including Fail Net
Settlement Positions,'' in the last sentence, and in GSD Rule 11,
Section 5, FICC proposes to remove the phrase ``or Fail Net Settlement
Position'' in the third sentence.
    In GSD Rule 11, Section 4, FICC would also add references to Fail
Deliver Obligations and Fail Receive Obligations in the first sentence
to enhance clarity. The first sentence would state that on each
Business Day, for each Eligible Netting Security with a separate CUSIP
number, except as otherwise provided in GSD Rule 14 with respect to
Forward Trades that comprise one or more Forward Net Settlement
Positions, FICC will establish a Net Settlement Position for trades,
and Fail Deliver Obligations and Fail Receive Obligations of a Netting
Member that have not previously been settled, by comparing the
aggregate par value of each Long Transaction and/or Fail Receive
Obligation in an Eligible Netting Security by the Netting Member
(hereinafter, the ``Long Total'') and each Short Transaction and/or
Fail Deliver Obligation in an Eligible Netting Security by the Netting
Member (hereinafter, the ``Short Total'').
    Current GSD Rule 11, Section 8 states that on each Business Day,
from their Scheduled Date, Fail Net Settlement Positions shall,
pursuant to GSD Rule 13, be marked to market, taking into account
accrued interest, until the Actual Settlement Date for such Positions.
Notwithstanding the above, FICC, in its sole discretion in order to
promote an orderly settlement process, may elect to not mark to market,
pursuant to GSD Rule 13, a Fail Net Long Position where the Eligible
Netting Securities that comprise such Position have been appropriately
delivered to FICC pursuant to the GSD Rules and FICC has not re-
delivered such Eligible Netting Securities, and as a result, has held
them overnight, Fail Deliver Obligations and Fail Receive Obligations
shall be netted with any other Receive Obligations and Deliver
Obligations.
    In GSD Rule 11, Section 8, FICC would (i) revise the reference from
Fail Net Settlement Positions to Fail Deliver Obligations and Fail
Receive Obligations in the title of the section, (ii) revise the
reference from Fail Net Settlement Positions to Fail Deliver
Obligations and Fail Receive Obligations, as applicable, in the first
sentence, (iii) revise the reference from Fail Net Long Position to
Fail Receive Obligation in the second sentence, (iv) as a conforming
change, in the first sentence, revise Positions to Fail Deliver
Obligations and Fail Receive Obligations, and (v) as a conforming
change, in the second sentence, revise Position to Fail Receive
Obligation.
    In GSD Rule 12, Section 1, FICC would revise the phrase ``a Fail
Net Settlement Position'' to ``either a Fail Deliver Obligation or Fail
Receive Obligation, as the context requires.'' In GSD Rule 12, Section
4, FICC would revise the title of the section and the references in the
section from ``Fail Net Settlement Positions'' to ``Fail Deliver
Obligations and Fail Receive Obligations'' and from ``Fail Net
Settlement Position'' to ``Fail Deliver Obligation and Fail Receive
Obligation.'' In GSD Rule 12, Section 5, FICC would revise Fail Net
Settlement Position to Fail Deliver Obligation.
    In GSD Rule 12, Section 1, FICC would also (i) correct the
reference from ``Netting Member's Fail Deliver Obligations and Fail
Receive Obligations'' to ``Netting Member's outstanding Deliver
Obligations and outstanding Receive Obligations,'' and (ii) correct the
reference from ``applicable Fail Deliver Obligations and Fail Receive
Obligations'' to ``applicable Deliver Obligations and Receive
Obligations.''
    In GSD Rule 13, Section 1(a), FICC would remove the phrase ``either
a Fail Net Settlement Position or.''
    In GSD Rule 13, Section 1(f), FICC would (i) revise Fail Net
Settlement Position to Fail Deliver Obligation and Fail Receive
Obligation, (ii) revise the reference from Fail Net Short Position to
Fail Deliver Obligation, and (iii) revise the reference from Fail Net
Long Position to Fail Receive Obligation. As such, GSD Rule 13, Section
1(f) would state that with regard to every Fail Deliver Obligation and
Fail Receive Obligation on a coupon payment date for the Eligible
Netting Securities that comprise such Fail Deliver Obligation and Fail
Receive Obligation: (1) if the Member has a Fail Deliver Obligation, it
will pay to FICC a Debit Coupon Adjustment Payment, and (2) if the

Member has a Fail Receive Obligation, it will collect from FICC a
Credit Coupon Adjustment Payment.
    In GSD Rule 13, Section 1(b), FICC would revise the word ``every''
to ``certain'' so it would state that with regard to certain Deliver
Obligations and Receive Obligations, either pay to FICC a Debit
Delivery Differential Adjustment Payment or collect from FICC a Credit
Delivery Differential Adjustment Payment. This proposed change would
enhance accuracy and reflect current practice because this payment only
applies to certain obligations and not every obligation. This proposed
change would not impact the rights and obligations of Members.
Proposed Changes To Remove References to Open Net Long Position and
Open Net Short Position
    Although Open Net Long Position and Open Net Short Position are
capitalized in the GSD Rules, these terms are not defined in the GSD
Rules. As such, FICC proposes to replace the references to Open Net
Long Positions and Open Net Short Position or Positions in GSD Rule 11,
Section 13, and make other related changes, as further described below.
    Specifically, in GSD Rule 11, Section 13, FICC would revise the
reference from ``an Open Net Long Position'' to ``a Fail Receive
Obligation'' and make a conforming change to revise ``Allocated Net
Long Position'' (which is currently defined in the same section) to
``Allocated Fail Receive Obligation.'' Similarly, FICC would revise the
reference from ``an Open Net Short Position or Positions'' to ``a Fail
Deliver Obligation or Fail Deliver Obligations'' and make a conforming
change to revise ``Allocated Net Short Position'' to ``Allocated Fail
Deliver Obligation.''
Proposed Changes To Remove Submission Size Alternatives
    Currently, GSD Rule 5, Section 4 states that FICC shall establish
procedures governing the manner in which FICC shall compare Full-Sized
Trades to trades submitted in pieces and the order in which such
comparison shall occur, and that FICC will inform Members of these
procedures by notice prior to their implementation. FICC is proposing
to remove this description regarding procedures governing the
comparison of Full-Sized Trades to trades submitted in pieces because
currently Full-Sized Trades can only be submitted as executed. FICC no
longer intends to implement a process to compare Full-Sized Trades to
trades submitted in pieces. Therefore, procedures governing the
comparison of Full-Sized Trades to trades submitted in pieces would no
longer be applicable.
Proposed Changes To Remove Reference to an Additional Fee
    GSD Rule 18, Section 2 currently states that if FICC determines
that a Netting Member has, without good cause, violated its obligations
pursuant to this section, such Netting Member may be, among other
things, subject to an additional fee. FICC proposes to remove the
reference to an additional fee because this reference is outdated and
FICC does not charge an additional fee.
Proposed Changes To Update the Definition of ``Report''
    Currently, the definition of ``Report'' in GSD Rule 1 means any
document, record, or other output prepared by FICC and made available
to a Member in any format (including, but not limited to, machine-
readable and print image formats) or medium (including, but not limited
to, print copy, magnetic tape, and CPU-to-CPU interface formats) that
provides information to such Member with regard to the services
provided by, or the operations of, FICC. FICC proposes to update the
definition of ``Report'' by stating such output would be available in
any format or medium prescribed by FICC, and by removing the
parentheticals which contain some descriptions of outdated formats.
Specifically, FICC would revise the definition of ``Report'' to state
that it means any document, record, or other output prepared by FICC
and made available to a Member in a format or medium prescribed by
FICC, that provides information to such Member with regard to the
services provided by, or the operations of, FICC.
    Similarly, FICC proposes to update GSD Rule 11, Section 10 to
remove the examples of the types of formats and mediums that a Report
may be provided in, as some of these examples are outdated. The current
provision in GSD Rule 11, Section 10 states that a Netting Member is
obligated to accept Reports from FICC in any format and in any medium
usable by such Member, including, but not limited to, print copy,
magnetic tape, and CPU-to-CPU (either real-time or otherwise) media.
FICC proposes to revise this description to be more general by stating
that a Netting Member is obligated to accept Reports from FICC in at
least one of the formats or mediums prescribed by FICC that is usable
by the Member.
    In addition, FICC proposes to remove the defined term ``CPU'' from
GSD Rule 1.
Proposed Changes To Remove References to FICC Facilities and Offices
    GSD Rule 31 describes distribution facilities that can be
established by FICC. Specifically, GSD Rule 31 states that if deemed
necessary, FICC will establish distribution facilities from time to
time to be used by Members for the distribution of papers, documents
and other materials incidental to the ordinary course of business. It
also states that FICC assumes no responsibility for the form or control
of any papers, documents or other material (other than items prepared
by it) placed in boxes in its distribution facilities assigned to each
Member or handled by FICC and that FICC does not assume any
responsibility for any improper or unauthorized removal from such boxes
or from FICC's facilities of any such papers, documents or other
materials. It also states that each Member must send an authorized
representative to FICC's distribution facilities to pick up material
made available by FICC and that FICC's distribution facilities will
remain open on Business Days during the hours specified by FICC and
that FICC will admit authorized persons holding valid passes at other
hours.
    Because GSD Rule 31 is outdated as there are no such distribution
facilities, FICC proposes to delete GSD Rule 31 and replace the
description to state that this Rule is reserved for future use, as well
as revise the title to ``Reserved.''
    FICC also proposes to remove Article V, Rule 13 of the EPN Rules.
FICC would delete the current description and revise the title of this
Rule to state ``Reserved for Future Use.'' This Rule currently states
that reports will be available to, and business with FICC shall be
transacted by, EPN Users at FICC's offices in New York, New York and
also at such other locations as FICC from time to time may designate.
It also states that each EPN User shall make arrangement satisfactory
to FICC for receipt of reports and the transaction of other business
with FICC at one or more of such locations. FICC is proposing to remove
this description because it is outdated as reports and the transaction
of other business with FICC by EPN Users occur through various
electronic means, such as machine-readable output, rather than in a
physical location.
Proposed Changes to GSD Rule 11, Section 5 To Reflect Current Practice
    GSD Rule 11, Section 5 states that a single Deliver Obligation may
be bound by FICC to more than one Receive Obligation, and vice versa.
FICC proposes to remove this description

because it is inaccurate and is not supported by the current system.
Specifically, because FICC must maintain a matched book of obligations,
there cannot be a single Deliver Obligation that is bound to more than
one Receive Obligation and vice versa. The current system only supports
a single Deliver Obligation being bound to one Receive Obligation.
Proposed Changes To Revise Provisions Regarding Network Fees
    Beginning in 2003, FICC periodically informed Members of the need
to migrate their telecommunications connectivity from the Securities
Industry Automation Corporation (``SIAC'')'s legacy-based Broker and
Access networks to DTCC's \8\ Securely Managed and Reliable Technology
(``SMART'') system or SIAC's Secure Financial Transaction
Infrastructure (``SFTI'') networks. The SMART system is DTCC's
centralized, end-to-end managed communications infrastructure, which
provides connectivity support for all post-trade clearance and
settlement processing. A related fee was implemented because while most
FICC Members complied with the stated migration requirements, several
Members continued to access FICC through legacy networks, which was
imposing significant unnecessary costs on FICC for continued support of
these systems.\9\ Today, there are no longer any such legacy network
connections, and therefore FICC is proposing to remove this fee from
the Rules.
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    \8\ The Depository Trust & Clearing Corporation (``DTCC'') is
FICC's parent company.
    \9\ Securities Exchange Act Release No. 52655 (October 24,
2005), 70 FR 62154 (October 28, 2005) (SR-FICC-2005-15) (``SMART
Filing'').
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    Specifically, in (a) Section III of the Fee Structure in the GSD
Rules, (b) the Schedule of Charges in the EPN Rules, (c) the Schedule
of Charges Broker Account Group in the MBSD Rules, and (d) the Schedule
of Charges Dealer Account Group in the MBSD Rules, FICC would delete
the fee for failure to migrate from legacy networks to SMART and/or
SFTI. The Rules currently state that the entire cost of supporting the
legacy network connections will be allocated among remaining users pro
rata. FICC would also make a related change to revise the title of
Section III of the Fee Structure in the GSD Rules to state that it is
reserved.
    In addition, in Section X of the Fee Structure in the GSD Rules,
FICC would clarify that FICC will charge network fees related to SMART
connectivity. Similarly, in (a) the Schedule of Charges in the EPN
Rules, (b) the Schedule of Charges Broker Account Group in the MBSD
Rules, and (c) the Schedule of Charges Dealer Account Group in the MBSD
Rules, FICC would revise the title of the ``Communication Fees''
section to ``Administrative Fees'' and add a description stating that
FICC will charge network fees related to SMART connectivity. Fees
related to SMART connectivity are currently charged to Members if
Members select SMART network as their means of connectivity to FICC.
FICC believes it would enhance clarity to specifically describe this
administrative fee that is currently charged to Members in the Rules
and, as such, FICC does not believe this proposed clarification would
impact the rights and obligations of Members.
Proposed Changes To Revise Description of Substitution of New
Securities Collateral
    FICC proposes to clarify the description regarding substitution of
New Securities Collateral in GSD Rule 18, Section 3(f) to reflect
current practice. FICC would add that upon receipt of a request for
such substitution where the information regarding the New Securities
Collateral has not been provided to FICC, a Generic CUSIP Number would
be applied to the substitution until the information regarding the New
Securities Collateral has been provided. FICC also proposes to clarify
the second sentence of GSD Rule 18, Section 3(f) by revising it to
state that until such time as FICC has been notified of the
substitution of the New Securities Collateral to be substituted, FICC
shall base margining with respect to the New Securities Collateral on
the applicable Generic CUSIP Number using the methodology that is used
for securities whose volatility is less amenable to statistical
analysis set forth in Section 1b of GSD Rule 4. FICC believes these
proposed changes would enhance clarity as they describe current
practice. Specifically, if a Member elects to substitute existing
securities collateral but does not know at the time of the notification
to FICC what the New Securities Collateral is, the Member is allowed to
enter the notification in the system, with the existing securities
collateral, and FICC will use a Generic CUSIP Number as placeholder for
the New Securities Collateral. It is the expectation that the Member
will then (on same Business Day and within established timeframes)
update the notification with the specific CUSIP Number and other
substitution-related details.
    GSD Rule 18, Section 3(f) currently states that upon receipt of a
request for such substitution and until information regarding New
Securities Collateral is provided to FICC for purposes of calculating
the Required Fund Deposit of the Repo Party, FICC shall assign to the
transaction a Contract Value which is 150 percent of the Contract Value
of the original securities collateral. FICC implemented this as one of
the measures to address the risk presented to it by the failure of a
party to submit in a timely manner information regarding replacement
collateral to FICC.\10\ In the 2005 Filing, FICC increased the clearing
fund calculation of the repo dealer and allowed margining with respect
to replacement collateral based on applicable Generic CUSIP Numbers
only, and FICC assigned a value of 150 percent of the contract value of
the original securities collateral to a repo transaction where FICC has
not received information regarding the replacement collateral.\11\ The
application of the 150 percent for clearing fund purposes applied to
both the receive/deliver and repo volatility components of the clearing
fund calculation. FICC also applied the highest applicable margin
factor in its Rules in connection with the repo transaction.\12\ In
2006, FICC replaced the current clearing fund methodology used at GSD,
which used haircuts and offsets, with a yield-driven value-at-risk
(``VaR'') methodology.\13\ The 2006 Filing states that this VaR
methodology will necessitate a change to FICC's risk management
consequences of the late allocation of repo substitution collateral
because offset classes and margin rates will no longer be present in
the revised GSD Rules.\14\ The 2006 Filing also states that FICC will
base margining for such Generic CUSIP Number on the same calculation as
that used for securities whose volatility is less amenable to
statistical analysis.\15\ In 2007, FICC added language to GSD Rule 18
(the rule that covers repo collateral substitution) to refer to the
margining approach that was described in the narrative of the 2006
Filing, so that Members reviewing the repo substitution rule (GSD Rule
18) will have a point of reference.\16\ As such, FICC should have
removed the language stating that ``[u]pon receipt of

a request for such substitution and until information regarding the New
Securities Collateral is provided to FICC for purposes of calculating
the Required Fund Deposit of the Repo Party, FICC shall assign to the
transaction a Contract Value which is 150 percent of the Contract Value
of the original securities collateral'' in the 2006 Filing, which
implemented the VaR methodology. FICC is proposing to remove the first
sentence of GSD Rule 18, Section 3(f) because this sentence should have
been removed in the 2006 Filing and does not reflect current practice.
---------------------------------------------------------------------------

    \10\ Securities Exchange Act Release No. 53534 (March 21, 2006),
71 FR 15781 (March 29, 2006) (SR-FICC-2005-18) (``2005 Filing'').
    \11\ Id.
    \12\ Id.
    \13\ Securities Exchange Act Release No. 55217 (January 31,
2007), 72 FR 5774 (February 7, 2007) (SR-FICC-2006-16) (``2006
Filing'').
    \14\ Id.
    \15\ Id.
    \16\ Securities Exchange Act Release No. 55616 (April 11, 2007),
72 FR 19561 (April 18, 2007) (SR-FICC-2007-03).
---------------------------------------------------------------------------

Proposed Changes Regarding Requirements Applicable to Certain Repo
Brokers With Segregated Repo Accounts
    GSD Rule 19, Section 2 describes the responsibilities of Repo
Brokers \17\ and the conditions that have to be met in order for a Repo
Broker to submit to FICC data on a Brokered Repo Transaction.
Currently, it states that a Repo Broker may submit to FICC data on a
Brokered Repo Transaction only upon written agreement, and compliance,
with certain conditions. FICC proposes to revise ``may'' to ``shall''
to enhance accuracy and consistency as well as reflect current practice
because Repo Brokers must submit this data to FICC, and Repo Brokers
are doing this today. Furthermore, this proposed change would enhance
accuracy and consistency because GSD Rule 3, Section 8(e) states that
an Inter-Dealer Broker Netting Member shall limit its business to
acting exclusively as a Broker and conduct all of its business in Repo
Transactions with Netting Members. FICC does not believe this proposed
change would impact the rights and obligations of Members because GSD
Rule 3, Section 8(e) states that an Inter-Dealer Broker Netting Member
shall conduct all of its business in Repo Transactions with Netting
Members, and this proposed change would align GSD Rule 19, Section 2
with this provision.
---------------------------------------------------------------------------

    \17\ The term ``Repo Broker'' is defined in GSD Rule 1, supra
note 5.
---------------------------------------------------------------------------

    GSD Rule 19, Section 2 lists the following conditions that have to
be met in order for a Repo Broker to submit to FICC data on a Brokered
Repo Transaction: (a) Repo Broker has established a separate account,
with a separate Fedwire address, at a clearing bank that will be used
exclusively for the settlement by the parties to the transaction of the
Start Leg, and (b) the Repo Broker has granted the necessary
permissions to allow this account to be subject to review by FICC. FICC
proposes to add language that was inadvertently omitted. Specifically,
FICC would add language stating that these requirements will not apply
to Repo Brokers with Segregated Repo Accounts that elect to settle
their Same-Day Settling Trades with FICC. In 2021, FICC began to settle
the Start Leg of Same-Day Settling Trades.\18\ Prior to this, the Start
Leg of Same-Day Settling Trades was settled outside of FICC, and a
separate account was needed for the settlement of the Start Leg.
Therefore, if a Repo Broker has opted to settle Same-Day Settling
Trades, then such Repo Broker would no longer need to maintain a
separate settlement account for the Start Leg of the Same-Day Settling
Trade because FICC settles the Start Leg and End Leg. As such, FICC
believes that this proposed change to correct an inadvertent omission
would not have any impact on the rights and obligations of Members.
---------------------------------------------------------------------------

    \18\ Securities Exchange Act Release No. 90948 (January 19,
2021), 86 FR 7159 (January 26, 2021) (SR-FICC-2020-015).
---------------------------------------------------------------------------

Proposed Changes To Update Description of Trade Date Information
    Currently, GSD Rule 10, Section 5 states that if the data on a
trade do not compare because information submitted regarding trade date
does not match, FICC may, in its discretion, compare the trade based on
a presumption that the earlier trade date submitted is the correct
trade date. FICC would correct this provision to clarify that FICC does
not have discretion.
    Specifically, FICC would state that if the data on a trade do not
compare because information submitted regarding the trade date does not
match, FICC shall compare the trade based on a presumption that the
earlier trade date submitted is the correct trade date, because FICC
does not have discretion as the system is not coded in a way to provide
FICC with such discretion. FICC would also remove the second sentence
in the first paragraph in GSD Rule 10, Section 5 that describes what
occurs when exercising this discretion.
    In addition, in GSD Rule 10, Section 5, FICC would clarify that
notwithstanding the first paragraph in this section, if the First
Member submits a side of a buy/sell transaction to FICC, and the Second
Member as a contra-party submits more than one side of a buy/sell
transaction with similar trade data to FICC where the trade date does
not match, FICC will compare the side of the buy/sell transaction
submitted by the First Member with a side of a buy/sell transaction
submitted by the Second Member where the trade date on the Second
Member's buy/sell transaction is closest in date range to the trade
date submitted by the First Member. This proposed change would enhance
accuracy with respect to how a side of a buy/sell transaction is
compared when the contra-party submits multiple sides of a buy/sell
transaction and the trade dates do not match.
    FICC would also add that the enhanced comparison process referenced
in GSD Rule 10, Section 5 does not apply to Repo Transactions when this
process is performed at the end of the day. Currently, GSD Rule 10,
Section 5 states that this section does not apply to Repo Transactions.
FICC believes this proposed change would enhance clarity with respect
to the current process.
Proposed Changes to Regarding FICC's Authority To Act on Behalf of a
GCF-Authorized Inter-Dealer Broker
    FICC proposes to remove Section 6 from GSD Rule 20. Currently, this
section states that if, as the result of a data submission error, a
GCF-Authorized Inter-Dealer Broker has a GCF Net Settlement Position,
FICC will have the authority to borrow cash and/or securities and/or
enter into repurchase transactions for cash or securities with a
Netting Member or Clearing Agent Bank to fulfill the obligations of
such GCF-Authorized Inter-Dealer Broker attendant to the incurring of
such Position. This section also states that if FICC takes such action,
such GCF-Authorized Inter-Dealer Broker will be liable to it for any
costs incurred. FICC proposes to delete Section 6 of GSD Rule 20
because it is outdated and the system no longer allows for FICC to act
on the GCF-Authorized Inter-Dealer's behalf if the GCF-Authorized
Inter-Dealer incurs a Position.
Proposed Changes to GSD Rule 11, Section 5 To Reflect Current Practice
    Currently, GSD Rule 11, Section 5 states that a single Deliver
Obligation may be bound by FICC to more than one Receive Obligation,
and vice versa. FICC proposes to remove this sentence from GSD Rule 11,
Section 5 because it does not reflect the current netting system.
Currently, all Deliver Obligations and Receive Obligations must be
equal and opposite out of the net.
4. Correct References to Incorrect Fees
    Section I.C of the Fee Structure of the GSD Rules states that the
charge to a Member for the entry of a request by such Member to modify
or cancel a side of a GCF Repo Transaction or a CCIT

Transaction is $0.05 per 50 million of par value. This fee is incorrect
and the system does not contain this fee. As such, FICC proposes to
remove this fee from Section I.C of the Fee Structure.
    Section X of the Fee Structure of the GSD Rules states that on any
Business Day, a Repo Broker will be assessed an administrative fee of
$50 for each instance where FICC determines to finance a Debit Forward
Mark Adjustment Payment in excess of the Cap, as set forth in Section 4
of GSD Rule 19. It also states that this administrative fee will be in
addition to any costs incurred by FICC in arranging the financing for
which the Repo Broker maintains responsibility and must reimburse FICC
pursuant to that section. FICC proposes to remove this administrative
fee and the related descriptions because FICC believes it would be too
administratively burdensome to charge this small administrative fee.
5. Include Eligibility Requirements for Settling Same-Day Settling
Trades
    GSD Rule 12, Section 11(ii) describes the requirements that a Same-
Day Settling Trade would have to meet to be eligible for settlement
with FICC. Currently, the requirements are as follows: (a) the Same-Day
Settling Trade is a Compared Trade; (b) the data on the Same-Day
Settling Trade are listed on a Report that has been made available to
Netting Members; (c) (i) the End Leg of the Same-Day Settling Trade
means the eligibility requirements for netting in GSD Rule 11 or (ii)
the Repo Transaction is an As-Of Trade and its End Leg settles on the
current Business Day or thereafter; and (d) the underlying securities
are Eligible Netting Securities. FICC proposes to add a requirement
regarding submission size requirements to the current list of
requirements described above. Specifically, FICC would add that
regarding the form and manner in which Same-Day Settling Trades are
submitted to FICC, the Same-Day Settling Trade must be submitted in
equal and identical size and shapes between Netting Members. FICC would
also add that for avoidance of doubt, ``identical size and shapes''
means that each counterparty must submit trade data reflecting equal
par amounts and number of sides. FICC currently requires that Same-Day
Settling Trades are submitted in equal and identical size and shapes
between Netting Members. As such, FICC believes that this proposed
change to expressly describe what must be submitted in terms of the
form and manner in which Same-Day Settling Trades are submitted to FICC
would enhance clarity with respect to the requirements for eligibility
for settlement for Same-Day Settling Trades. Furthermore, this proposed
change describes how Members currently process transactions. As such,
because this proposed change reflects current practice, FICC does not
believe that this proposed change will impact Members.
    In addition, GSD Rule 12, Section 11(ii) states that
notwithstanding the above, FICC may, in its sole discretion, exclude
any Same-Day Settling Trade or Same-Day Settling Trades from the
Comparison System, by Netting Member or by Eligible Netting Security.
FICC would add that this includes cancelling any Same-Day Settling
Trade that does not meet the eligibility requirements set forth in GSD
Rule 12.
6. Correct Schedule of Timeframes
    FICC proposes to make certain corrections to the Schedule of
Timeframes in the GSD Rules, including adding two timeframes and
revising a current timeframe. Specifically, FICC proposes to add a 7:00
a.m. timeframe and a 7:05 a.m. timeframe. FICC also proposes to revise
the 10:30 p.m. to 2:00 a.m. timeframe in the Schedule of Timeframes in
the GSD Rules.
    The 7:00 a.m. timeframe in the Schedule of Timeframes would be
described as the timeframe by which FICC begins processing trade data
for the current Business Day. This would align with the Schedule of GCF
Repo Timeframes, which currently lists a 7:00 a.m. timeframe, and is
described as the timeframe when FICC begins accepting data on GCF Repo
Transactions. As such, FICC believes it would enhance clarity and
consistency to have both schedules describe the time by which FICC
begins processing trade data. FICC believes these proposed changes
would help enhance Members' understanding of when FICC begins
processing trade data and reflects current practice. As such, FICC does
not believe this proposed change would have an impact on the rights and
obligations of Members.
    Additionally, FICC proposes to add a 7:05 a.m. timeframe, which
would be described as the time by which FICC's margining output is made
available to Netting Members.
    FICC would also update the reference to margining output that is in
the current 10:30 p.m. to 2:00 a.m. timeframe. Currently, the
description of this timeframe states this is the time during which
FICC's comparison, netting, settlement and margining output is made
available to Members. FICC would revise the description to state this
is the time by which FICC's comparison, netting, and settlement output
is made available to Members. FICC does not believe these proposed
changes would impact the rights and obligations of Members because
these proposed changes to the Schedule of Timeframes reflect current
practice and, therefore, would enhance accuracy and clarity.
    In addition, FICC would revise the current 10:30 p.m. to 2:00 a.m.
timeframe to only state 2:00 a.m. to be consistent with the other
timeframes in the Schedule of Timeframes, which are not listed as
ranges. FICC believes this proposed change would enhance consistency,
and thereby enhance accuracy, and as such, would not impact the rights
and obligations of Members.
    FICC would also remove the phrase ``for Netting Members'' in the
4:30 p.m. timeframe to be consistent with the 10:00 a.m. timeframe.
Both these timeframes describe when funds-only settlement debits and
credits are executed via the Federal Reserve's National Settlement
Service. FICC does not believe this proposed change to enhance
consistency and clarity would impact the rights and obligations of
Members.
7. Correct Schedule of GCF Repo Timeframes
    FICC also proposes to make certain corrections to the Schedule of
GCF Repo Timeframes in the GSD Rules. Specifically, FICC would revise
the 7:00 a.m. timeframe, and remove the 10:00 a.m., 10:30 a.m., and
1:00 p.m. timeframes because the 10:00 a.m., 10:30 a.m. and 1:00 p.m.
timeframes are outdated.
    Currently, the 7:00 a.m. timeframe states that FICC begins to
accept from GCF Authorized Inter-Dealer Brokers data on GCF Repo
Transactions, and GCF Authorized Inter-Dealer Brokers must submit data
on a GCF Repo Transaction that they are a party to within five minutes
of executions of such transaction. FICC would revise this 7:00 a.m.
timeframe to state that Netting Members must begin affirming or
cancelling GCF Repo Transactions upon receipt of data on such GCF Repo
Transactions from FICC.
    Additionally, FICC proposes to remove the 10:00 a.m. 10:30 a.m. and
1:00 p.m. timeframes. The 10:00 a.m. timeframe states that this is the
time Netting Members must begin affirming or disaffirming GCF Repo
Transactions within one half hour of receipt of data on such
transactions from FICC. The 10:30 a.m. timeframe currently states that
this is the deadline for dealer affirmation or disaffirmation of all
GCF

Repo Transactions that they are a party to that are executed prior to
10 a.m. The 1:00 p.m. timeframe currently states that for GCF Repo
Transactions executed after 1:00 p.m., Netting Members must affirm or
disaffirm GCF Repo Transactions within ten minutes of their receipt of
data on such transactions from FICC.
    FICC believes these proposed changes to remove outdated timeframes
and clarify the 7:00 a.m. timeframe described above would enhance
consistency and accuracy, and thereby make it clear that Members must
begin affirming or cancelling their trades when the system opens at
7:00 a.m. FICC does not believe these proposed changes would impact the
rights and obligations of Members because these proposed changes would
more accurately describe current practice.
8. Correct References From ``Disaffirm'' To ``Cancel''
    FICC proposes to revise the references from disaffirm to cancel in
GSD Rule 6C, Section 12. This section describes the affirmation,
cancellation and modification requirements for Data on GCF Repo
Transactions.
    FICC would also revise the references from ``disaffirmation'' to
``cancellation'' in the 3:00 p.m. timeframe in the Schedule of GCF Repo
Timeframes in the GSD Rules to be consistent with the proposed changes
to the 7:00 a.m. timeframe described above. The 3:00 p.m. timeframe
currently states this is the cutoff for GCF Repo Transaction data
submission from GCF Authorized Inter-Dealer Brokers to FICC including
dealer trade affirmation or disaffirmation--all unaffirmed trades
automatically affirmed by FICC.
9. Correct Description of Acknowledgement and Refusal Messages
    FICC proposes to make certain corrections to GSD Rule 13, Section
5(h) to enhance accuracy. Currently, GSD Rule 13, Section 5(h) states
that a Funds-Only Settling Bank that cannot send an acknowledgment or
refusal message to FICC due to an operational issue may telephone its
instructions to the Settlement Agent. FICC proposes to revise GSD Rule
13, Section 5(h) to correct that a Funds-Only Settling Bank that cannot
send an acknowledgement or refusal message to the Settlement Agent due
to an operational issue may instruct the Settlement Agent to act on its
behalf. FICC believes these proposed changes would clarify that the
acknowledgement or refusal message is sent to the Settlement Agent
(rather than FICC) and that replacing ``telephone its instructions to''
with ``instruct'' would clarify that the Funds-Only Settling Bank may
telephone its instructions or provide its instructions in another way.
10. Correct Definition of ``Repo Start Date''
    FICC proposes to correct the definition of Repo Start Date in GSD
Rule 1 to state that it means the settlement date for the Start Leg of
a Repo Transaction. The current definition states that it means the
settlement date for the start date of a Repo Transaction.
11. Make Corrections to Certain GSD Schedules
    In the (i) Schedule of Required and Accepted Data Submission Items
for a Substitution and (ii) Schedule of Required and Accepted Data
Submission Items for New Securities Collateral in the GSD Rules, FICC
proposes to add ``or Generic CUSIP Number'' to Item 1 in each schedule,
which was inadvertently omitted. Currently, Item 1 in each schedule
only lists Specific CUSIP Number for the Existing Securities Collateral
or New Securities Collateral, as applicable. However, FICC must receive
either the Specific CUSIP Number or Generic CUSIP Number for the
Existing Securities Collateral or New Securities Collateral, as
applicable, in order to process a substitution of Existing Securities
Collateral or New Securities Collateral, as applicable.
    In the Schedule of Required and Other Data Submission Items for GCF
Repo Transactions in the GSD Rules, FICC proposes to correct the
reference from ``Trade Reference Number'' to ``Broker Reference
Number'' to enhance accuracy. Currently, Broker Reference Number in
this schedule is described as the GCF-Authorized Inter-Dealer Broker's
unique reference number for the GCF Repo Transaction. As such, FICC
believes it would enhance accuracy and clarity to refer to this item as
the Broker Reference Number rather than the Trade Reference Number.

B. Clarifications

    FICC is proposing to make a number of clarifications to the Rules,
as described in greater detail below. FICC believes that each of these
proposed changes would improve the clarity of the Rules, for the
reasons described below, and does not believe that that any of the
proposed clarifications would impact the rights and obligations of
Members.
1. Clarify Calculation of the Funds-Only Settlement Amount
    In GSD Rule 13, Section 2, FICC proposes to make certain
clarifications to the calculation of the Funds-Only Settlement Amounts
to describe the current calculation of the Funds-Only Settlement
Amounts more accurately. For GSD, funds-only settlement occurs twice on
a Business Day, at 10:00 a.m. and 4:30 p.m., and therefore, the Funds-
Only Settlement Amount is calculated twice on a Business Day.
Specifically, the intraday Funds-Only Settlement Amount is calculated
and then collected or paid intraday on the same Business Day. The
Funds-Only Settlement Amount that is collected or paid at the start of
day on a Business Day is calculated at the end of the previous Business
Day. For example, the Funds-Only Settlement Amount that is collected or
paid at 10:00 a.m. on March 2, 2023 is calculated at the end of day on
March 1, 2023. In addition, these two Funds-Only Settlement Amounts are
calculated using different components, as further described below.
    Currently, GSD Rule 13, Section 2 states that the Funds-Only
Settlement Amount of each Netting Member shall be determined by
calculating the net total, for a particular Business Day of the
following and then lists the components that are part of the
calculation of this amount. FICC proposes to revise the reference from
``for a particular Business Day'' to ``for a particular cycle, if
applicable,'' to enhance clarity and accuracy. For GSD, as described
above, currently, funds-only settlement occurs twice on a Business Day
and therefore, there are two cycles during the Business Day during
which the Funds-Only Settlement Amount is calculated. As such, FICC
believes it is more precise and accurate to refer to a particular cycle
in the description of the calculation of the Funds-Only Settlement
Amount and as this proposed change would reflect the current
calculation of the Funds-Only Settlement Amounts, FICC does not believe
this proposed change would impact the rights or obligations of Members.
    In addition, in GSD Rule 13, Section 2, FICC proposes to add ``the
return of the previous cycle's Net Forward Mark Adjustment Payment'' as
a component in the calculation of the Funds-Only Settlement Amount of
each Netting Member, and this would be added as subsection (d). The Net
Forward Mark Adjustment Payment is currently listed as a component of
the Funds-Only Settlement Amount, but FICC believes it

would enhance clarity to also list the return of the previous cycle's
Net Forward Mark Adjustment Payment in the description of the
calculation of the Funds-Only Settlement Amount.\19\ FICC believes this
proposed change would be a more accurate description of the current
process. During each cycle, FICC calculates a new Net Forward Mark
Adjustment Payment and so, also returns the previous cycle's Net
Forward Mark Adjustment Payment. As described above, funds-only
settlement occurs twice a day at GSD, so the cycle at 10:00 a.m. may
include the return of the previous cycle's Net Forward Mark Adjustment
Payment (the previous cycle would be the cycle that occurred at 4:30
p.m. the previous Business Day). FICC believes these proposed changes
enhances clarity by more accurately describing the current process and
therefore, would not impact the rights or obligations of Members.
---------------------------------------------------------------------------

    \19\ ``Net Forward Mark Adjustment Payment'' is defined in GSD
Rule 1, supra note 5.
---------------------------------------------------------------------------

    Similarly, in GSD Rule 13, Section 2, FICC proposes to revise the
first sentence of the third paragraph to refer to a particular cycle
rather than Business Day and to add the phrase ``if applicable.'' In
addition, FICC proposes to clarify the components of the Funds-Only
Settlement Amount that are currently calculated and collected or paid
intraday by replacing the current description with a list of the
specific components, which are the Net Forward Mark Adjustment Payment,
the return of the previous cycle's Net Forward Mark Adjustment Payment
and the Miscellaneous Adjustment Amount. The current description states
that FICC will determine an intraday Funds-Only Settlement Amount by
calculating a net total, for a particular Business Day, of certain of
the amounts specified in Section 1 of GSD Rule 13 as FICC shall
announce to Members from time to time. The revised description would
state that FICC will determine an intraday Funds-Only Settlement Amount
by calculating a net total, for a particular cycle, if applicable, of
the following: (a) the Net Forward Mark Adjustment Payment, (b) the
return of the previous cycle's Net Forward Mark Adjustment Payment, and
(c) Miscellaneous Adjustment Amount. FICC believes these proposed
changes to this paragraph in GSD Rule 13, Section 12 would enhance
clarity with respect to the intraday Funds-Only Settlement Amount.
Because this proposed change would reflect the current calculation of
the Funds-Only Settlement Amount that is calculated and collected or
paid intraday, FICC does not believe this proposed change would impact
the rights or obligations of Members.
    FICC would also clarify that certain components of the Funds-Only
Settlement Amount are only applicable to the end of the day cycle, and
some are only applicable to the intraday cycle. FICC would clarify that
the components of the Funds-Only Settlement Amount in the second
paragraph of GSD Rule 13, Section 2, are calculated at the end of the
day and then collected or paid start of day, as applicable, on the
following Business Day, are the amounts listed in (a) through (p) of
this paragraph. Similarly, with respect to the third paragraph of GSD
Rule 13, Section 2, FICC would clarify that the components of the
Funds-Only Settlement Amount that are calculated and collected or paid
intraday, as applicable, are the amounts listed in (a) through (c) of
this paragraph. Because these proposed changes would reflect the
current calculation of the Funds-Only Settlement Amounts, FICC does not
believe these proposed changes would impact the rights or obligations
of Members.
2. Clarify Definition of ``Account''
Proposed Changes To Clarify Account, Broker Account, and Dealer
Account, and Netting Member Account
    FICC proposes to make certain clarifications to the definition of
``Account'' in GSD Rule 1, as further described below. FICC believes
the proposed changes described below would clarify the various types of
Accounts that currently exist at FICC.
    The current definition of ``Account'' in GSD Rule 1 means any
account maintained by FICC on behalf of a Netting Member. FICC proposes
to revise the definition of ``Account'' to state that it means any
account maintained by a Member. FICC believes these proposed changes to
the definition of ``Account'' would enhance consistency, and thereby
also enhance clarity. Specifically, these proposed changes would revise
the definition of ``Account'' to be more consistent with the
definitions for other types of Accounts, such as a Broker Account and a
Sponsoring Member Omnibus Account.
    As such, because FICC is proposing to revise the definition of
``Account'' to mean any account maintained by the Member, as described
above, FICC would also add a definition for ``Netting Member Account''
in GSD Rule 1 to specifically describe an account maintained by FICC on
behalf of a Netting Member. FICC proposes to add that Netting Member
Account would mean an Account maintained by a Netting Member that
contains the activity of the Netting Member that is submitted to FICC.
FICC would also add that a Netting Member may elect to establish one or
more Netting Member Accounts.
    In addition, the current definition of ``Account'' in GSD Rule 1
includes definitions for ``Broker Account'' and ``Dealer Account'' and
also describes that with respect to an applicable Cross-Margining
Agreement, ``Account'' may include a Market Professional Cross-
Margining Account. FICC proposes to move the definitions of ``Broker
Account'' and ``Dealer Account'' from the definition of ``Account'' so
that each of these terms are listed separately and in alphabetical
order in GSD Rule 1. ``Broker Account'' would mean an Account
maintained by an Inter-Dealer Broker Netting Member or a Segregated
Repo Account of a Non-IDB Repo Broker. ``Dealer Account'' would mean an
Account maintained by a Netting Member that is not a Broker Account.
FICC believes that separately listing the defined terms ``Broker
Account'' and ``Dealer Account'' in GSD Rule 1 rather than within
another defined term in GSD Rule 1 would enhance readability and
clarity.
    FICC believes the above-described proposed changes in the GSD Rules
would enhance clarity with respect to the various types of Accounts
that currently exist. Because these are clarifications of the
descriptions of the current types of Accounts, FICC does not believe
that the above-described proposed changes would impact the rights and
obligations of Members.
Proposed Changes To Capitalize References to Account, Accounts, and
Account(s)
    FICC would capitalize the references to account, accounts, and
account(s), as applicable, in the GSD Rules, including, for example,
(1) in the definitions of ``Market Professional Cross-Margining
Account'', ``MLA Excess Amount,'' and ``Segregated Repo Account'' in
GSD Rule 1; (2) GSD Rule 13, Section 5(d); (3) GSD Rule 3, Sections
11(a), (c), (e), (f); (4) GSD Rule 3A, Sections 10(b) and 11; (5) GSD
Rule 19, Section 4; and (6) Sections V and VII of the Fee Structure of
the GSD Rules.
    FICC believes it would enhance clarity and consistency to use the
defined term ``Account'' by capitalizing the current references, as
described above. Because these are clarifications of the descriptions
of the current types of Accounts, FICC does not believe that the above-
described proposed changes

would impact the rights and obligations of Members.
Proposed Changes To Revise References to Netting Member Account
    Because FICC would add a definition for ``Netting Member Account,''
FICC proposes to make the following changes:
     In GSD Rule 3, Sections 11(b) and (d), FICC proposes to
revise ``netting accounts'' to ``Netting Member Accounts.''
     In GSD Rule 3A, Sections 2(h), 10(b), 11 and 12, FICC
proposes to revise ``Netting System accounts'' to ``Netting Member
Accounts.''
     In GSD Rule 3A, Section 18, FICC proposes to revise
``Netting System Account(s)'' to ``Netting Member Account(s).''
     In GSD Rule 3A, Section 6(c), FICC proposes to revise
``netting account'' to ``Netting Member Account.''
    FICC believes revising these references to the new defined term
``Netting Member Account'' would enhance clarity and consistency with
respect to the current references in the GSD Rules that describe this
type of account. As such, FICC does not believe that the above-
described proposed changes would impact the rights and obligations of
Members.
    FICC also proposes to revise the reference from ``participant
account'' to ``Account'' in GSD Rule 19, Section 2.
3. Clarify Definition of ``Transactions''
    FICC proposes to clarify the definition of Transactions in GSD Rule
1 by revising a reference from Direct Transactions to Bilateral
Transactions. FICC would also remove the defined term ``Direct
Transactions'' from GSD Rule 1. Currently, ``Transactions'' means
Brokered Transactions and Direct Transactions. In addition, ``Direct
Transactions'' means any transaction, including a Repo Transaction,
calling for the delivery of an Eligible Netting Security or the posting
of cash or an Eligible Netting Security as collateral, the data on
which has been submitted to FICC by Members, that is not a Brokered
Transaction.
    FICC would add a definition for Bilateral Transactions in GSD Rule
1 to enhance clarity. Bilateral Transactions would mean any
transaction, including a Repo Transaction, the data on which has been
submitted to FICC by two Members, and is not a Brokered Transaction.
    FICC believes the above-described proposed changes to replace the
term ``Direct Transactions'' to the more descriptive term ``Bilateral
Transactions'' and to simply the definition of ``Bilateral
Transactions'' would enhance clarity. Furthermore, FICC does not
believe the above-described proposed changes would impact the rights
and obligations of Members because these are the current types of
Transactions that are submitted to FICC.
4. Add References to CCIT Transactions
    In the second to last sentence of the definition of End Leg in GSD
Rule 1, FICC proposes to revise the reference from transaction to GCF
Repo Transaction or CCIT Transaction, as applicable. In addition, in
the definition of GCF Transaction Adjustment Payment, FICC proposes to
revise the reference from transactions to GCF Repo Transactions and
CCIT Transactions, as applicable.
    FICC believes replacing the word ``transaction'' with the defined
terms in the above-described definitions would enhance clarity by
providing consistency and specificity with respect to the transactions
that are being referenced in these definitions. Furthermore, these
definitions currently include a reference to GCF Repo Transactions and
CCIT Transactions. As such, FICC does not believe that these proposed
changes to enhance clarity would impact the rights and obligations of
the Members.
5. Revise GSD Rule 18, Sections 2 and 3 To Enhance Clarity
    In GSD Rule 18, Section 2, FICC proposes to clarify that each
Netting Member that has requested to add the repo netting service
operated by FICC must submit to FICC, or to either another Registered
Clearing Agency or Clearing Agency that has been exempted from
registration as a Clearing Agency by the SEC, for comparison and
netting, data on all of its Repo Transactions. Currently, GSD Rule 18,
Section 2 states that each Netting Member that has requested of FICC
that it provide its Netting System services for such Member's Repo
Transaction data submissions must submit to FICC, or to either another
Registered Clearing Agency or Clearing Agency that has been exempted
from registration as a Clearing Agency by the SEC, for comparison and
netting, data on all of its Repo Transactions. FICC believes this
proposed change would enhance clarity and accuracy because it is when
Netting Members request to add the repo netting service operated by
FICC that they are required to submit to FICC or another Registered
Clearing Agency or Clearing Agency that has been exempted from
registration as a Clearing Agency by the SEC, for comparison and
netting, the data on all of its Repo Transactions. Furthermore, the
repo netting service operated by FICC and the Netting System services
for such Member's Repo Transaction data submissions are different ways
of describing the same service provided by FICC. As such, FICC does not
believe that these proposed clarifications would impact the rights and
obligations of Members.
    In addition, in GSD Rule 18, Section 2, the last sentence of the
first paragraph and the sixth paragraph both describe collateral
substitutions pertaining to Repo Transactions and are duplicative.
Specifically, both sentences state that all collateral substitutions
pertaining to Repo Transactions must be performed through FICC, and the
requisite collateral substitution requests must be submitted to FICC in
accordance with the requirements, procedures and timeframes established
by FICC from time to time. As such, FICC proposes to remove this
description from GSD Rule 18, Section 2 and add this description to GSD
Rule 18, Section 3 because GSD Rule 18, Section 3 contains provisions
related to collateral substitutions. FICC believes these proposed
changes would enhance clarity and would not impact the rights and
obligations of Members.
6. Clarify Descriptions of Novation
Proposed Changes To Revise Defined Term ``Novation'' To Include Uses of
``Novate''
    In GSD Rule 1, FICC proposes to revise the defined term
``Novation'' to ``Novation or Novate'' and to add that the term
``Novate'' shall have a corollary meaning. Novation is currently
defined as the termination of deliver, receive, and related payment
obligations between Netting Members and the replacement of such
obligations with identical obligations to and from FICC, pursuant to
Section 8 of GSD Rule 5. FICC believes this proposed change to add
Novate to the current definition of Novation and specify that
``Novate'' has a corollary meaning would enhance clarity as Novation
and Novate are both currently used in the GSD Rules to describe the
termination of deliver, receive, and related payment obligations
between Netting Members and the replacement of such obligations with
identical obligations to and from FICC. As such, FICC believes this
added specificity would enhance clarity and would not impact the rights
and obligations of Members.
    FICC also proposes to capitalize the references to novate and
novated in GSD Rule 3A, Sections 2(i), 7(a), 7(b), 14(c), 16(b) and
18(e); GSD Rule 3B, Section 14(b); GSD Rule 5, Section 8(a), 8(b),

and 8(d); GSD Rule 11, Section 6; GSD Rule 12, Section 11(iii); GSD
Rule 14, Section 3; GSD Rule 20, Section 5; and GSD Rule 21A. FICC
believes these proposed changes to use the defined terms by
capitalizing the current references to novate and novated in the above-
referenced GSD Rules would enhance clarity and would not impact the
rights and obligations of Members.
    FICC also proposes to revise the definition of Novation in GSD Rule
1 to include CCIT Members (or Joint Accounts), which was inadvertently
omitted. Specifically, FICC proposes to revise this definition to state
that Novation means the termination of deliver, receive, and related
payment obligations between Netting Members, or between a CCIT Member
(or Joint Account) and a Netting Member, and the replacement of such
obligations with identical obligations to and from FICC, pursuant to
Section 8 of GSD Rule 5. Currently, GSD Rule 5, Section 8(a) states
that Novation consists of the termination of the deliver, receive and
related payment obligations between the Netting Members, or between a
CCIT Member (or Joint Account) and a Netting Member, with respect to
the Compared Trade and their replacement with identical obligations to
and from FICC in accordance with the GSD Rules. As such, FICC believes
this proposed change to the definition of Novation would enhance
clarity by correcting an inadvertent omission in the definition of
Novation and would not impact the rights and obligations of Members.
Proposed Changes To Replace References To Guaranty, Guarantee, and
Guaranty of Settlement With Novation or Novate
    FICC also proposes to remove references to guaranty, guarantee, and
Guaranty of settlement and/or replace such references with Novation or
Novate. FICC believes it would enhance clarity and consistency to
describe this process in the GSD Rules using the defined term Novation
or Novate.\20\ Furthermore, FICC believes it would enhance clarity to
remove duplicative descriptions.
---------------------------------------------------------------------------

    \20\ FICC is proposing to revise the definition of Novation to
add Novate, as described above.
---------------------------------------------------------------------------

    Specifically, FICC proposes to remove GSD Rule 11B (Guaranty of
Settlement). GSD Rule 11B, Section (a) currently describes requirements
that must be satisfied for FICC to guarantee the settlement of that
trade. Specifically, GSD Rule 11B, Section (a) states that FICC will
guarantee the settlement of a trade the data on which were submitted
for Bilateral Comparison, Demand Comparison, or Locked-in Comparison at
the time the comparison of such trade occurs pursuant to GSD Rules 6A,
6B, or 6C, respectively, as long as the trade meets the requirements of
Section 2 of GSD Rule 11 and was entered into good faith. FICC is
proposing to delete this Section (a) of GSD Rule 11B to enhance clarity
and consistency because FICC believes this description is duplicative
in the GSD Rules. Furthermore, FICC believes it would enhance clarity
to consistently use the one defined term Novation. Currently, GSD Rule
5, Section 8(a) states that each Compared Trade that meets the
requirements of Section 2 of GSD Rule 11 and was entered into good
faith shall be novated to FICC and FICC shall guarantee the settlement
of each Compared Trade at the time at which comparison of such Compared
Trade occurs pursuant to GSD Rules 6A, 6B, or 6C.\21\ GSD Rule 5,
Section 8(a) currently also states that such Novation shall consist of
the termination of the deliver, receive and related payment obligations
between the Netting Members, or between a CCIT Member (or Joint
Account) and a Netting Member, with respect to the Compared Trade
(including, if such Compared Trade is a Repo Transaction, any Right of
Substitution established by the parties) and their replacement with
identical obligations to and from FICC in accordance with these Rules.
---------------------------------------------------------------------------

    \21\ FICC is also proposing to remove the references to guaranty
in GSD Rule 5, Section 8, as described further below.
---------------------------------------------------------------------------

    GSD Rule 11B, Section (b) describes the guaranty referred to in
Section (a). Specifically, GSD Rule 11B, Section (b) states that this
guaranty means FICC's obligation to include the trade in calculating a
Net Settlement Position and to novate the deliver, receive, and payment
obligations that were created by the trade pursuant to the GSD Rules.
It also states that FICC's guaranty of settlement of an individual
trade applies only to the settlement of the trade as it exists as part
of a Net Settlement Position. FICC is proposing to remove GSD Rule 11B,
Section (b) to enhance clarity and consistency. FICC believes this
section is duplicative and that by using the defined terms Novation or
Novate instead of Guaranty would enhance clarity and consistency.\22\
Novation is currently a defined term in GSD Rule 1 and means the
termination of deliver, receive, and related payment obligations
between Netting Members and the replacement of such obligations with
identical obligations to and from FICC pursuant to Section 8 of Rule 5.
In addition, GSD Rule 11 describes the Netting System and the
establishment of Net Settlement Positions. Specifically, GSD Rule 11,
Section 1 states that the Netting System is a system for aggregating
and matching offsetting obligations from trades submitted by or on
behalf of Netting Members in Eligible Netting Securities. GSD Rule 11,
Section 3 describes the obligation to submit trades to FICC for
comparison and netting. GSD Rule 11, Section 4 states that on each
Business Day, for each Eligible Netting Security with a separate CUSIP
number, with certain exceptions, FICC will establish a Net Settlement
Position or Fail Net Settlement Position, as applicable.
---------------------------------------------------------------------------

    \22\ FICC is also proposing to clarify the definition of
``Novation'' to include ``Novate'', as further described above.
---------------------------------------------------------------------------

    GSD Rule 11B, Section (c) describes the circumstances when FICC's
guaranty described in GSD Rule 11B, Sections (a) and (b) are no longer
in effect. GSD Rule 11B, Section (c) states that the guaranty referred
to in subsections (a) and (b) above shall no longer be in effect if the
trade becomes uncompared, is cancelled, or settles pursuant to the
Rules. FICC is proposing to remove GSD Rule 11B, Section (c) to enhance
clarity and consistency by using the terms Novation or Novate instead
of Guaranty and FICC believes this section is duplicative. GSD Rule 5,
Section 8(c) and (d) also describes what occurs when a trade becomes
uncompared or is cancelled pursuant to the GSD Rules.\23\
---------------------------------------------------------------------------

    \23\ FICC is also proposing to clarify the description of what
occurs if a trade becomes uncompared or is cancelled in GSD Rule 5,
Section 8(c) pursuant to the GSD Rules, as further described below.
---------------------------------------------------------------------------

    GSD Rule 11B, Section (d) describes the requirements that must be
satisfied for FICC to guarantee the settlement of Same-Day Settling
Trades. FICC is proposing to remove GSD Rule 11B, Section (d) to
enhance clarity and consistency as FICC believes this section is
duplicative. GSD Rule 5, Section 8(b) currently states that each Same-
Day Settling Trade that becomes a Compared Trade and was entered into
good faith will be novated to FICC. In addition, the eligibility for
settlement of Same-Day Settling Trades is currently described in GSD
Rule 12, Section 11(ii).
    As described above, FICC believes removing GSD Rule 11B would
enhance clarity and consistency as this rule describes FICC's guaranty
of settlement and is duplicative, as described above. As such, FICC
does not believe the proposed change to remove GSD Rule 11B would
impact the rights and obligations of Members.
    GSD Rule 3A, Section 2(i) currently states that any Sponsored
Member Trades which have received FICC's

guaranty of settlement and been novated to FICC shall continue to be
processed and guaranteed by FICC. FICC proposes to revise GSD Rule 3A,
Section 2(i) and Rule 3A, Section 16 to state any Sponsored Member
Trades which have been Novated by FICC shall continue to be processed
by FICC.
    In addition, GSD Rule 3A, Section 7(a)(iv) states that FICC's
guaranty of settlement shall apply to Sponsored Member Trades and such
trades shall be novated in the same manner in which trades of Netting
Members are novated and settlement is guaranteed pursuant to Section 8
of GSD Rule 5. FICC proposes to revise GSD Rule 3A, Section 7(a)(iv) to
state that Sponsored Member Trades shall be Novated in the same manner
in which trades of Netting Members are Novated pursuant to Section 8 of
GSD Rule 5. FICC would also revise the title of GSD Rule 3A, Section 7
from ``The Netting System, Novation and Guaranty of Settlement'' to
``The Netting System and Novation.'' GSD Rule 3A, Section 14(c)
currently states that any Sponsored Member Trades which have received
FICC's guaranty of settlement and been novated to FICC shall continue
to be processed and guaranteed by FICC. FICC proposes to revise GSD
Rule 3A, Section 14(c) to state any Sponsored Member Trades which have
been Novated by FICC shall continue to be processed by FICC.
    FICC also proposes to remove GSD Rule 3B, Section 12, which states
that GSD Rule 11B (Guaranty of Settlement) shall apply to CCIT
Transactions that are Compared Trades. FICC also proposes to revise GSD
Rule 3B, Section 14(b) to remove the phrase ``guaranteed and.'' As
such, GSD Rule 3B, Section 14(b) would state that once FICC has ceased
to act for a Netting Member with whom a CCIT Member traded pursuant to
these GSD Rules, if any portions of such trades, as Novated pursuant to
these GSD Rules, remain outstanding, then, if FICC determines, in its
sole discretion, that the procedures below are necessary to address
certain of FICC's liquidity needs, FICC may initiate transactions under
the CCIT MRA as provided below.
    FICC also proposes to remove the phrase ``and guarantee the
settlement of'' from GSD Rule 21A(v).
    In addition, FICC proposes to revise GSD Rule 5, Section 8. FICC
would remove the phrase ``and Guaranty'' from the title of this
section. FICC also proposes to remove the phrase ``and the Corporation
shall guarantee the settlement of each such Compared Trade'' from GSD
Rule 5, Sections 8(a) and 8(b).
    Furthermore, FICC proposes to clarify GSD Rule 5, Section 8(b) by
adding a proviso that was inadvertently omitted, so that it would state
that each Same-Day Settling Trade that becomes a Compared Trade and was
entered into in good faith shall be Novated to FICC at the time at
which the comparison of such trade occurs pursuant to GSD Rules 6A or
6B, as applicable, provided the trade meets the requirements of Section
11(ii) of GSD Rule 12.
    FICC would also revise GSD Rule 11, Section 14 to enhance clarity.
Currently, GSD Rule 11, Section 14 states that FICC shall not guaranty
fails charge proceeds in the event of a default (i.e., if the
defaulting Member does not pay its fails charge, Members due to receive
fails charge proceeds will have those proceeds reduced pro-rata by the
defaulting Member's unpaid amount). FICC proposes to state that FICC
shall not be under any obligation to pay fails charge proceeds in the
event of a default (i.e., if the Defaulting Member does not pay its
fails charge, Members due to receive fails charge proceeds will have
those proceeds reduced pro-rata by the Defaulting Member's unpaid
amount) to enhance clarity and accuracy.
7. Clarify Uncompared or Cancelled Trades
    FICC proposes to clarify the descriptions of what occurs to trades
that become uncompared or are cancelled in the GSD Rules.
    GSD Rule 5, Section 8(c) currently states that if a trade becomes
uncompared or is cancelled pursuant to these GSD Rules, the Novation
and FICC's guaranty of settlement of such transaction shall be
reversed, cancelling the deliver, receive, and related payment
obligations between FICC and the applicable Netting Members, and, as
applicable, CCIT Member (or Joint Account), created by such Novation.
FICC proposes to revise this description in GSD Rule 5, Section 8(c) to
remove the description stating that Novation and guaranty of settlement
will be reversed if a trade becomes uncompared or cancelled pursuant to
the GSD Rules. Specifically, FICC proposes to revise GSD Rule 5,
Section 8(c) to state that if a trade becomes uncompared or is
cancelled pursuant to these GSD Rules, the deliver, receive, and
related payment obligations between FICC and the Netting Members and,
as applicable, CCIT Member (or Joint Account), created by the Novation
of such trade shall be terminated and cancelled, and no amounts shall
be owing between FICC and the Netting Members or CCIT Member (or Joint
Account) on account of such trade. FICC believes the proposed changes
would enhance accuracy as to what occurs if a trade becomes uncompared
or is cancelled pursuant to the GSD Rules, and thereby also enhance
clarity. FICC is proposing changes to the description in the GSD Rules
and is not proposing changes to what occurs if a trade becomes
uncompared or cancelled pursuant to the GSD Rules and as such, FICC
does not believe that these proposed changes to GSD Rule 5, Section
8(c) would impact the rights and obligations of Members.
    Similarly, FICC proposes to revise GSD Rule 12, Section 11(iii) to
describe what occurs if a novated Same-Day Settling Trade becomes
uncompared or is cancelled to be consistent with the above-described
proposed changes in GSD Rule 5, Section 8(c) to the description of what
occurs if a trade becomes uncompared or is cancelled pursuant to the
GSD Rules. GSD Rule 12, Section 11(iii) currently states that if a
novated Same-Day Settling Trade becomes uncompared or is cancelled
pursuant to these GSD Rules, the Novation and FICC's guaranty of
settlement of such transaction shall no longer apply, cancelling the
deliver, receive, and related payment obligations between FICC and the
applicable Netting Members, created by such Novation. FICC proposes to
revise GSD Rule 12, Section 11(iii) to state that if a Novated Same-Day
Settling Trade becomes uncompared and is cancelled pursuant to these
GSD Rules, the deliver, receive, and related payment obligations
between FICC and the Netting Members created by the Novation of such
trade shall be terminated and cancelled, and no amounts shall be owing
between FICC and the Netting Members on account of such trade. FICC
believes having consistent descriptions of what occurs if a trade or
Same-Day Settling Trade becomes uncompared or cancelled pursuant to the
GSD Rules would enhance clarity. FICC is proposing clarifications to
the description in the GSD Rules and is not proposing changes to what
occurs if a Same-Day Settling Trade becomes uncompared or cancelled
pursuant to the GSD Rules and as such, FICC does not believe that these
proposed changes to GSD Rule 12, Section 11(iii) would impact the
rights and obligations of Members.
8. Clarify Timing and Cumulative Effect of Presumptions
    Current GSD Rule 10, Section 6 (which would be revised to Section 7
because FICC is proposing to add a new Section 6, as described below)
states that notwithstanding anything to the

contrary in this Rule, more than one presumption of a match of data may
be used by FICC to generate a comparison of a trade. FICC would revise
the first paragraph in this section to state that notwithstanding
anything contrary in this Rule, FICC may apply more than one
presumption of a match of data to generate a comparison of a trade.
FICC believes this proposed change would enhance readability, and
thereby enhance clarity and would not impact the rights and obligations
of Members.
    The second paragraph of this section of GSD Rule 10 states that
FICC will provide Members with prior notice setting forth, with regard
to each enhanced comparison process, whether it will be performed in
Real Time or at end of day. FICC proposes to remove this description
and replace it with more specific language that describes which
enhanced matching processes occur in Real Time and which occur at the
end of day. FICC proposes to add a description stating that FICC would
perform the enhanced comparison processes regarding the presumed match
of data set forth in Sections 1, 2, 5 and 6 of GSD Rule 10 in Real
Time, and that FICC would also perform the enhanced comparison
processes regarding the presumed match of data set forth in Sections 1,
2, 3, 4, 5 and 6 of GSD Rule 10 at end of day, with the exception that,
at end of day, Sections 4 and 5 would not apply to Repo Transactions.
FICC believes these proposed changes that this additional specificity
in the GSD Rules as to which enhanced matching processes occur at what
times would enhance clarity and would not impact the rights and
obligations of Members.
9. Clarify Substitutions of Collateral
    In GSD Rule 20, Section 4, FICC proposes to clarify the
descriptions relating to substitutions of collateral, which both state
that all requests for substitutions must be made by the substitution
deadline established by FICC and announced by to Members by Important
Notice from time to time. FICC proposes to remove the last sentence
from the first paragraph and the last sentence from the second
paragraph, which each contains this description. FICC would add a new
paragraph to GSD Rule 20, Section 4, which states that for the
avoidance of doubt, Dealers will be able to substitute any previously
described collateral during the day and until such time as their new
Collateral Allocation Obligations for that day are fully satisfied and
finalized with the GCF Clearing Agent Bank. FICC believes that these
proposed changes would remove duplicative language and as such, would
not impact the rights and obligations of Members.
10. Clarify Right of Substitution
    Currently, GSD Rule 11, Section 6 states that notwithstanding
anything to the contrary in the above paragraph, if a Right of
Substitution was established by the parties to a Repo Transaction, such
Right of Substitution shall continue, and be recognized by FICC, after
the netting of obligations pursuant to the above paragraph. FICC
proposes to revise GSD Rule 11, Section 6 to state that notwithstanding
anything to the contrary in the above paragraph, a Right of
Substitution applicable to a Repo Transaction that constitutes all or
part of a Net Settlement Position shall be recognized by FICC pursuant
to these Rules. Parties to a Repo Transaction may agree to a Right of
Substitution in their bilateral agreements. However, because FICC is
not a party to such agreements, and therefore does not have a view into
what was agreed to in these bilateral agreements, FICC proposes to
revise GSD Rule 11, Section 6 to clarify that FICC recognizes a Right
of Substitution applicable to a Repo Transaction that constitutes all
or part of a Net Settlement Position (rather than a Right of
Substitution established by the parties to a Repo Transaction, which is
how it is currently described in the GSD Rules), and such Right of
Substitution would be recognized pursuant to the GSD Rules (rather than
that the Right of Substitution was established by the parties to a Repo
Transaction). FICC believes these proposed changes to the description
of the Right of Substitution with respect to Repo Transactions that
constitute all or part of a Net Settlement Position would enhance
accuracy, and thereby enhance clarity and FICC is not proposing changes
to the Right of Substitution. As such, FICC does not believe this
proposed change would impact the rights and obligations of Members.
    Furthermore, currently, GSD Rule 5, Section 8(e) states that if a
Right of Substitution was established by the parties to a Repo
Transaction, such Right of Substitution shall continue and be
recognized by FICC after Novation. As such, FICC proposes to remove GSD
Rule 5, Section 8(e) because the Right of Substitution would be
described in GSD Rule 11, Section 6, as described above. FICC does not
believe that this proposed change would impact the rights and
obligations of Members.
    In addition, FICC proposes to revise GSD Rule 14, Section 3.
Currently, GSD Rule 14, Section 3 states that notwithstanding another
to the contrary in the above paragraph, if a Right of Substitution was
established by the parties to a Repo Transaction, such Right of
Substitution shall continue, and be recognized by FICC, after the
netting of obligations pursuant to the above paragraph. FICC would also
revise GSD Rule 14, Section 3 to state that notwithstanding anything to
the contrary in the above paragraph, a Right of Substitution applicable
to a Repo Transaction that constitutes all or part of a Forward Net
Settlement Position shall be recognized by FICC pursuant to these
Rules. FICC would revise the description in GSD Rule 14, Section 3 to
be consistent with the above-described proposed changes to GSD Rule 11,
Section 6. FICC believes having consistent descriptions of the Right of
Substitution applicable to Repo Transactions that constitute all or
part of a Net Settlement Position (as described above) or Forward Net
Settlement Position would enhance clarity. FICC is proposing
clarifications to the description in the GSD Rules to enhance accuracy
and clarity and is not proposing changes to the Right of Substitution
and as such, FICC does not believe that these proposed changes to GSD
Rule 14, Section 3 would impact the rights and obligations of Members.
    FICC also proposes to clarify GSD Rule 18, Section 3(f), which
currently states that FICC will have no obligation to ensure the
acceptability to the Reverse Repo Party of any New Securities
Collateral transferred pursuant to this section. FICC proposes to
clarify this sentence by adding that FICC also will not record,
authenticate or monitor the number of collateral substitutions
performed in accordance with the Right of Substitution. FICC believes
this additional detail would enhance clarity and describes what
currently happens. As such, FICC does not believe that this proposed
change to GSD Rule 18, Section 3(f) would impact the rights and
obligations of Members.
11. Clarify Affiliated Members
    FICC proposes to revise the description relating to Affiliated
Members in GSD Rule 10, Section 3 to enhance clarity and readability.
    GSD Rule 10, Section 3 describes a situation in which a Member
submits data on one side of a trade against an incorrect contraparty
that would have been compared had it been submitted against the correct
contraparty, and these two contraparties are Affiliates and Members of
GSD. A Member submits data against the identifying numbers of its
contraparty. For example, assume Member 2 and Member 3 are Affiliates
and both are Members of GSD.

Also, assume that Member 1 submitted data on a side of trade against
Member 2 (the incorrect contraparty to the trade) and Member 3
submitted against Member 1. These trades would not compare because the
counterparties do not match. Member 1 should have submitted the trade
against Member 3 (the correct contraparty to the trade). However, if
Member 2 and Member 3 have notified FICC that they are Affiliates and
that they each wish to be presumed to be the correct contraparty to the
side of the trade, then FICC has the discretion to compare the trade
based on Member 1's correct contraparty being Member 3.
    Currently, GSD Rule 10, Section 3 states that if data on a side of
a trade submitted by a Member (hereinafter, the ``First Member'')
against another Member (hereinafter, the ``Non-Countraparty Affiliated
Member'') do not compare as submitted, but would compare if matched
against data submitted by a third member that is an Affiliate of the
Non-Contraparty Affiliated Member (hereinafter, the ``Contraparty
Affiliated Member''), FICC may, in its discretion, if it has received
notice from the Non-Contraparty Affiliated Member and the Contraparty
Affiliated Member, in a form and manner satisfactory to FICC (which
notice may vary on a product-by-product basis), stating that they are
Affiliates and that each wishes to be presumed to be the correct
countraparty to a side of a trade submitted with an indication that the
other is the contraparty, if this would allow the data on the trade to
match, compare the trade based on the first Member's correct
contraparty being the Contraparty Affiliated Member.
    FICC proposes to remove the current description in GSD Rule 10,
Section 3 and replace it with a clearer description. FICC would state
that Members that are Affiliates may submit written authorization to
FICC stating that each Affiliate wishes to be presumed to be the
correct contra-party to a side of a trade, if this presumption would
allow the data on a trade that has differing contra member identifying
numbers to match. Such written authorization must be in a form and
manner satisfactory to FICC and may vary on a product-by-product basis.
If a trade between two contra-parties (hereinafter, the ``First
Member'' and ``Second Member'') submitted to FICC does not match
because the First Member submitted the contra member identifying number
of the Second Member's Affiliate instead of the Second Member, FICC
shall compare the trade based on the Second Member's trade submission
as if the First Member submitted the contra member identifying number
of the Second Member and FICC has received the written authorization
referred to in this paragraph from the Second Member and the Second
Member's Affiliate.
    As described above, to enhance clarity, FICC proposing to revise
the current description in GSD Rule 10, Section 3 of what occurs when a
Member submits data on one side of a trade against an incorrect
contraparty that would have been compared had it been submitted against
the correct contraparty, and these two contraparties are Affiliates and
Members of GSD; FICC is not proposing changes to the process. As such,
FICC does not believe these proposed changes would impact the rights
and obligations of Members.
12. Clarify Pricing Rate
    Currently, GSD Rule 3B, Section 14(a)(xii) states that the Pricing
Rate (as defined in the CCIT MRA) in respect of each Transaction shall
be the rate published on FICC's website at the time FICC initiates such
Transaction, corresponding to: (A) U.S. Treasury < 30-year maturity
(CUSIP: 371487AE9) if the Purchased Securities under such Transaction
are U.S. Treasury bills, notes or bonds, (B) Non-Mortgage Backed U.S.
Agency Securities (CUSIP: 371487AH2) if the Purchased Securities under
such Transaction are non-mortgage-backed U.S. agency securities or (C)
Fannie Mae, Freddie Mac, and UMBS Fixed Rate MBS (CUSIP: 371487AL3) if
the Purchased Securities under such Transaction are mortgage-backed
securities, or if the relevant foregoing rate is unavailable, a rate
that FICC reasonably determines approximates the average daily interest
rate paid by a seller of the Purchased Securities under a cleared
repurchase transaction.
    FICC proposes to revise GSD Rule 3B, Section 14(a)(xii) to remove
the specific references to the General CUSIP Numbers and the related
descriptions listed in subsections (A), (B), and (C). Specifically,
FICC proposes to revise this section to state that the Pricing Rate (as
defined in the CCIT MRA) in respect of each Transaction shall be the
rate that FICC reasonably determines approximates the average daily
interest rate paid by a seller of the Purchased Securities under a
cleared repurchase transaction. There may be changes in the market that
may affect the rates that correspond to the specific Generic CUSIP
Numbers that are currently listed in the GSD Rules. As such, these
proposed changes would provide FICC with more flexibility to respond
more quickly to changes in the market without a rule filing and better
enable FICC to use rates that are current and reflect the market while
at the same time, ensuring that the GSD Rules remain accurate. FICC
does not believe this proposed change would impact the rights and
obligations of Members because the GSD Rules currently provide that if
the rates are unavailable, then the Pricing Rate will be a rate that
FICC reasonably determines approximates the average daily interest rate
paid by a seller of the Purchased Securities under a cleared repurchase
transaction. As such, the GSD Rules currently enable FICC to select
rates that approximate the average daily interest rate paid by a seller
of the Purchased Securities under a cleared repurchase transaction.
13. Clarify References to Treasury Department Regulations
    GSD Rule 6C, Section 8 states that in its sole discretion, FICC may
decline to accept from a Locked-In Trade Source data on the Locked-In
Trades of a particular Member or Members, including Netting-Eligible
Auction Purchases (subject to terms and conditions agreed to by FICC
and the Treasury Department regarding Netting-Eligible Auction
Purchases).
    GSD Rule 6C, Section 11 states that FICC has the authority, in
order to correct or avoid an error, to unilaterally modify, add, or
cancel data on any Netting-Eligible Auction Purchase (subject to terms
and conditions agreed to by FICC and the Treasury Department regarding
Auction Purchases). This section also states that in the event a
security auctioned in a Treasury Department auction is not issued, FICC
will have the authority to unilaterally modify, add, or cancel data on
any Netting-Eligible Auction Purchase involving that security (subject
to terms and conditions agreed to by FICC and the Treasury Department
regarding Auction Purchases).
    FICC proposes to clarify the above-described references in GSD Rule
6C, Sections 8 and 11 from the terms and conditions agreed to by FICC
and the Treasury Department regarding Netting-Eligible Auction
Purchases or Auction Purchases (as applicable) to the applicable
Treasury Department regulations regarding Netting-Eligible Auction
Purchases. FICC would revise these references because FICC believes it
is more accurate to state that the applicable Treasury Department
regulations govern the Netting-Eligible Auction Purchases rather than
describing it as the terms and conditions agreed to by FICC and the
Treasury Department. FICC and the Treasury

Department do not have a separate agreement with terms and conditions
regarding Auction Purchases. As such, FICC believes these proposed
changes to reference the applicable Treasury Department regulations
regarding Netting-Eligible Auction Purchases instead of the terms and
conditions agreed to by FICC and the Treasury Department regarding
Auction Purchases would enhance accuracy, and thereby enhance clarity.
FICC does not believe that these proposed clarifications would impact
the rights and obligations of Members.
14. Clarify References to Federal Reserve Banks Operating Circulars
    FICC proposes to revise the Interpretive Guidance with Respect to
Settlement Finality in the GSD Rules and MBSD Rules to allow this
guidance to remain accurate, current and aligned with any future
revisions to the Federal Reserve Banks Operating Circulars (``Operating
Circulars'').
    Currently, the Interpretive Guidance with Respect to Settlement
Finality in the GSD Rules and MBSD Rules (i) reference specific
sections in the Operating Circulars, (ii) refer to specific dates of
certain Operating Circulars, and (iii) include direct quotations from
the Operating Circulars, including specific text and defined terms.
    FICC proposes to revise this guidance to be more general by
removing specific section references to the Operating Circulars and
replacing those references with more general descriptions of the
subjects covered in such sections of the Operating Circulars in the
event the specific section references change when the Operating
Circulars are updated or revised. FICC would also remove references to
specific dates of the Operating Circulars and replace them with
references to the Operating Circulars ``as promulgated from time to
time by the FRB.''
    In addition, FICC proposes to remove specific quotations of text
and defined terms. FICC would replace the direct quotations of defined
terms with cross-references to the relevant Operating Circulars. FICC
also proposes to remove the dates at the end of the Interpretative
Guidance with Respect to Settlement Finality in the GSD Rules and MBSD
Rules.
    FICC believes that these proposed changes would enhance accuracy by
allowing the GSD Rules and MBSD Rules to remain accurate, current and
aligned following any revisions to the Operating Circulars, and thereby
enhance clarity. FICC does not believe these proposed clarifications
would impact the rights and obligations of Members.
15. Clarify Uses of Terms ``Written Notice'' and ``Notice''
    FICC proposes to clarify that ``written notice'' in the definition
of GCF-Authorized Inter-Dealer Broker in GSD Rule 1 and ``notice'' in
GSD Rule 3B, Section 6 both refer to Important Notices, which are
posted to the DTCC website. FICC believes revising this reference from
written notice and notice to the issuance of an Important Notice would
enhance clarity because the proposed changes provide additional
specificity. FICC does not believe that this proposed clarification
would impact the rights and obligations of Members.
16. Clarify Definition of Settlement Agent
    FICC would clarify the definition of Settlement Agent in GSD Rule 1
and MBSD Rule 1 by adding a parenthetical stating ``and as referenced
in the Federal Reserve Banks Operating Circular 12.'' As such, because
the parenthetical would be added to the definition of ``Settlement
Agent'' in the GSD Rules and MBSD Rules, FICC also proposes to remove
from GSD Rule 13, Section 5(g) and MBSD Rule 11, Section 9(g), the
parenthetical stating ``as that term is used in the relevant FRB's
Operating Circular 12 and in these Rules'' that currently follows the
references to Settlement Agent.
    FICC believes it would enhance clarity to add the parenthetical to
the definition of Settlement Agent and this proposed change would not
impact the rights and obligations of Members.
17. Clarify Money Tolerances
    Currently, the GSD Rules contain a Schedule of Money Tolerances,
which lists the Money Tolerances that have been established by
FICC.\24\ FICC proposes to add a new Section 6 to GSD Rule 10, titled
``Money Tolerances.'' FICC would state in this new section that if the
data of a Required Match Data item on a trade do not compare because
the dollar amount(s) submitted by two Members differs, FICC will
compare the trade if the difference in the Required Match Data item is
within the tolerance specifications set by FICC in the Schedule of
Money Tolerances.
---------------------------------------------------------------------------

    \24\ The term ``Money Tolerance'' is defined in GSD Rule 1,
supra note 5.
---------------------------------------------------------------------------

    FICC believes adding this section in GSD Rule 10 that cross-
references the current Schedule of Money Tolerances would enhance
clarity with respect to the current practice regarding the comparison
of a trade where there are differences in the dollar amount(s)
submitted by two Members. As such, FICC does not believe this proposed
clarification would impact the rights and obligations of Members.
18. Clarify GSD Rule 11, Section 12
    In GSD Rule 11, Section 12, FICC proposes to delete the sentence
stating that Netting Members shall inform FICC promptly after the
occurrence of any event specified earlier in that Section 12 and revise
the first sentence to state that each Netting Member shall be obligated
to inform FICC promptly if any referenced events were to occur. FICC
believes this proposed change would enhance clarity with respect to
Netting Members' requirement to promptly notify FICC in these
circumstances by moving the description of that requirement to the
beginning of the section rather than at the end. As such, FICC does not
believe this proposed clarification would impact the rights and
obligations of Members.
19. Clarify GSD Rule 5, Section 6
    Currently GSD Rule 5, Section 6 states that, except as otherwise
provided in GSD Rule 10, any confirmations, comparison or other
documentary evidence of any such Compared Trade, other than the
comparison generated by FICC shall not affect the existence or terms
and conditions of such a valid, binding and enforceable contract in
respect of such Compared Trade.
    FICC proposes to clarify GSD Rule 5, Section 6 by removing the
phrase ``[e]xcept as otherwise provided in Rule 10,'' and instead
restating the referenced language in GSD Rule 5, Section 6.
Specifically, FICC proposes to add to GSD Rule 5, Section 6 that,
notwithstanding the previous sentence, the comparison by FICC of a
trade involving unmatched commission amounts pursuant to the GSD Rules,
while evidencing a valid, binding and enforceable contract between the
parties to the trade to the same degree as if the commission amounts
matched shall not constitute a final, binding determination by FICC as
to the correct commission amount owing on such trade. The Broker that
submitted data on such trade shall have an ongoing obligation to the
Dealer that submitted data on such trade to respond promptly to such
Dealer's commission difference inquiries, and to act in good faith to
promptly resolve any such alleged differences.
    FICC believes this proposed change would enhance readability, and
thereby enhance clarity and would not impact the rights and obligations
of Members.

20. Clarify Indemnification Provisions
    FICC proposes to clarify the indemnification provisions in
connection with an FFI Member failing to be FATCA Compliant in the GSD
Rules and the MBSD Rules. These indemnification provisions are
described in the provisions relating to the membership application and
the provisions relating to the ongoing membership requirements in the
GSD Rules and MBSD Rules. GSD Rule 3 describes the ongoing membership
requirements. Specifically, current GSD Rule 3, Section 9(iii) states
that an FFI Member agrees to indemnify FICC, its affiliates, and each
of their respective shareholders, directors, officers, employees,
agents and advisors (each, an ``Indemnified Person'') for any loss,
liability or expense sustained by the Indemnified Party as a result of
such FFI Member failing to be FATCA Compliant.
    GSD Rule 2A, MBSD Rule 2A and GSD Rule 3B, Section 3 describe the
membership application requirements. GSD Rule 2A, Section 2(a)(v) and
MBSD Rule 2A, Section 1 currently state that in addition, as part of
its membership application, each applicant that shall be an FFI Member
must agree that it shall indemnify FICC for any loss, liability or
expense sustained by FICC as a result of its failing to be FATCA
Compliant. Similarly, GSD Rule 3B, Section 3(c)(i) states that in
addition, as part of its membership application, such applicant must
agree that it shall indemnify FICC for any loss, liability or expense
sustained by FICC as a result of the applicant failing to be FATCA
Compliant.
    The indemnification in connection with an FFI Member failing to be
FATCA Compliant is also described in the ongoing membership
requirements in the GSD Rules and the MBSD Rules. Specifically, MBSD
Rule 3, Section 8(iii) currently states that an FFI Member will
indemnify FICC for any loss, liability or expense sustained by FICC as
a result of such FFI Member failing to be FATCA Compliant. In addition,
GSD Rule 3B, Section 5(j)(iii) currently states that a CCIT Member that
is an FFI Member shall indemnify FICC for any loss, liability or
expense sustained by FICC as a result of such CCIT Member failing to be
FATCA Compliant.
    In order to enhance consistency, and thereby enhance clarity, FICC
proposes to revise the indemnification provisions in connection with an
FFI Member failing to be FATCA Compliant described in GSD Rule 2A,
Section 2(a)(v), MBSD Rule 2A, Section 1, GSD Rule 3B, Section 3(c)(i),
MBSD Rule 3, Section 8(iii), and GSD Rule 3B, Section 5(j)(iii) to
align with the current indemnification provision in connection with an
FFI Member failing to be FATCA Compliant described in current GSD Rule
3, Section 9(iii). Specifically, FICC proposes to revise GSD Rule 2A,
Section 2(a)(v) and MBSD Rule 2A, Section 1 to state that in addition,
as part of its membership application, each applicant that shall be an
FFI Member agrees to indemnify each Indemnified Person for any loss,
liability or expense sustained by the Indemnified Person as a result of
its failing to be FATCA Compliant.
    Similarly, FICC proposes to revise the indemnification provision in
connection with an FFI Member failing to be FATCA Compliant in MBSD
Rule 3, Section 8(iii) to align with the current indemnification
provision in connection with an FFI Member failing to be FATCA
Compliant described in current GSD Rule 3, Section 9(iii).
Specifically, FICC also proposes to revise MBSD Rule 3, Section 8(iii)
to state that an FFI Member agrees to indemnify FICC, its affiliates,
and each of their respective shareholders, directors, officers,
employees, agents and advisors (each, an ``Indemnified Person'') for
any loss, liability or expense sustained by the Indemnified Person as a
result of such FFI Member failing to be FATCA Compliant. FICC also
proposes to revise GSD Rule 3B, Section 5(j)(iii) to state that a CCIT
Member that is an FFI Member shall indemnify each Indemnified Person
for any loss, liability or expense sustained by the Indemnified Person
as a result of such CCIT Member failing to be FATCA Compliant.
    Furthermore, FICC proposes to add Indemnified Person as a new
defined term to MBSD Rule 1 as a conforming change. Indemnified Person
would have the meaning given to that term in Section 8 of MBSD Rule 3.
This proposed change would also be consistent with the GSD Rules, which
also lists Indemnified Person as a defined term in GSD Rule 1.
    FICC believes that the above-described proposed changes would
enhance clarity by having consistent indemnification provisions in
connection with an FFI Member failing to be FATCA Compliant in the MBSD
Rules and GSD Rules, and the above-described proposed changes would
align the indemnification described in GSD Rule 2A, Section 2(a)(v),
MBSD Rule 2A, Section 1, GSD Rule 3B, Section 3(c)(i), MBSD Rule 3,
Section 8(iii), and GSD Rule 3B, Section 5(j)(iii) with the current
indemnification described in GSD Rule 3, Section 9(iii). FICC also
believes it would enhance clarity to list Indemnified Person as a new
defined term in MBSD Rule 1 and would be consistent with the GSD Rules,
as described above. FICC does not believe these proposed changes to the
indemnification provisions for FFI Members failing to be FATCA
Compliant in the GSD Rules and MBSD Rules described above would have an
impact on the rights and obligations of Members because these
indemnification provisions describe the costs of non-compliance and
FICC's position has always been that the costs of non-compliance would
be imposed on the FFI Members that fail to be FATCA Compliant.\25\ FICC
also does not believe that the related proposed change to add
Indemnified Person as a new defined term in MBSD Rule 1 would impact
the rights and obligations of Members because it is a conforming
change.
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    \25\ Securities Exchange Act Release No. 69740 (June 12, 2013),
78 FR 36608 (June 18, 2013) (SR-FICC-2013-04).
---------------------------------------------------------------------------

21. Clarify Timeframes and the Schedule of Timeframes
    In GSD Rule 5, Section 5, FICC proposes to revise the reference
from time schedules to timeframes to enhance consistency, and thereby
clarity.
    In addition, currently, GSD Rule 11, Section 4 states that all Net
Settlement Positions will be reported, by CUSIP Number, by FICC in a
Report issued and made available during the morning of each Business
Day to each Netting Member. FICC proposes to revise this sentence to
refer to the Schedule of Timeframes and to remove the phrase ``during
the morning of each Business Day.''
    Similarly, GSD Rule 14, Section 2 states that each Forward Net
Settlement Position of a Netting Member will be reported, by CUSIP
Number, by FICC in a Report issued and made available during the
morning of each Business Day during the Forward Period applicable to
such Position to such Member. FICC proposes to remove the phrase ``and
made available during the morning of'' and instead, replace it with the
phrase ``by the time stated in the Schedule of Timeframes for.''
    FICC believes these proposed changes would enhance clarity by
removing more general references to time and directing members to refer
to the Schedule of Timeframes, which contains specific timeframes. FICC
does not believe that these proposed clarifications would impact the
rights and obligations of Members because the Schedule of Timeframes
currently sets forth specific timeframes.

22. Clarify References to the Fine Schedule
    In GSD Rule 3B, Section 5(f), FICC proposes to clarify that Members
should refer to the Fine Schedule in the GSD Rules for the dollar
amount of the fine by deleting the reference to $1,000 and adding that
the fine is pursuant to the applicable Fine Schedule in the GSD Rules.
FICC believes this proposed change would enhance clarity by removing a
duplicative reference to the amount of the fine and directing Members
to refer to applicable Fine Schedule, which currently lists the amount
of the fines. FICC does not believe that this proposed clarification
would impact the rights and obligations of Members because this
proposed change does not change the amount of the fines.
23. Other Clarifications to Schedules in the GSD Rules
Proposed Changes to Titles of Certain Schedules
    FICC proposes to clarify the following titles of certain schedules
in the GSD Rules and make related changes, as described below.
    First, FICC proposes to revise the title from ``Schedule of
Required and Accepted Data Submission Items for a Substitution'' to
``Schedule of Required and Accepted Data Submission Items for a
Substitution of Existing Securities Collateral.'' This schedule sets
forth the data items that are required to be received by FICC for FICC
to process a substitution of Existing Securities Collateral.
Furthermore, FICC would make a conforming change to revise the
reference to this schedule in GSD Rule 18, Section 3 from ``Schedule of
Required and Accepted Data Submission Items for a Substitution'' to
``Schedule of Required and Accepted Data Submission Items for a
Substitution of Existing Securities Collateral.'' FICC believes adding
``of Existing Collateral'' to the end of the title ``Schedule of
Required and Accepted Data Submission Items for a Substitution'' would
enhance clarity by adding more specificity to the title. Furthermore,
FICC believes that making conforming changes to the current references
to this schedule in the GSD Rules would enhance consistency and
therefore, also enhance clarity. FICC does not believe these proposed
clarifications would impact the rights and obligations of Members.
    Second, FICC would also revise the title of another schedule from
``Schedule of Required and Accepted Data Submission Items for New
Securities Collateral'' to ``Schedule of Required and Accepted Data
Submission Items for a Substitution for New Securities Collateral.''
FICC believes that adding ``for a Substitution'' in the current title
``Schedule of Required and Accepted Data Submission Items for New
Securities Collateral'' would enhance clarity by adding more
specificity to the title. FICC does not believe this proposed
clarification would impact the rights and obligations of Members.
Proposed Changes to Descriptions in Certain Schedules
    FICC also proposes to clarify the following descriptions in certain
schedules in the GSD Rules.
    In the Schedule of Required Match Data, FICC proposes to change
Contra Member identifying information to Contra Member identifying
number to enhance accuracy, and thereby enhance clarity. FICC believes
it is more accurate to describe this data item using the word
``number'' rather than ``information.''
    In the Schedule of Required Data Submission Items, FICC proposes to
add a description for Trade Date, stating that the date on which the
trade was executed must be submitted in this field. FICC believes this
additional detail regarding the meaning of Trade date would enhance
clarity by adding more specificity.
    In the Schedule of Required and Accepted Data Submission Items for
New Securities Collateral, FICC proposes to clarify the first paragraph
by revising ``it'' to ``the Corporation.'' FICC believes this proposed
change would add more specificity, and thereby enhance clarity.
    In the Schedule of Required and Other Data Submission Items for GCF
Repo Transactions, FICC proposes to remove (i) Role--Reserved for
future use and (ii) Transaction--Reserved for future use.
    In the Schedule of Required and Other Data Submission Items for GCF
Repo Transactions, FICC also proposes to revise the descriptions from
(i) Participant number of the GCF Counterparty from whom the Broker is
reversing in securities, and (ii) Participant number of the GCF
Counterparty to whom the Broker is repoing out securities to (i) Member
identifying number of the GCF Counterparty from whom the Broker is
reversing in securities and (ii) Member identifying number of the GCF
Counterparty to whom the Broker is repoing out securities,
respectively. FICC believes it is more accurate to use ``Member''
rather than ``Participant'' in these descriptions.
    In the Schedule of Required and Other Data Submission Items for GCF
Repo Transactions, FICC also proposes to revise (i) Participant ID to
Member ID and (ii) Participant Name to Member Name.
    In the Schedule of Money Tolerances, FICC proposes to clarify the
current description of the settlement amount in Item 2 by revising it
to state that it is $40 per $1 million for buy-sell transactions (in
connection with FICC's presumption of a match of data pursuant to GSD
Rule 10). FICC is proposing to clarify this sentence to specifically
state that it applies to buy-sell transactions rather than stating what
it does not apply to (i.e., it does not apply to Repo Transactions).
Furthermore, this proposed clarification aligns the wording in this
Item 2 with the description in Item 1 of the Schedule of Money
Tolerances, which describes the settlement amount for repo transactions
and the settlement amount for buy-sell transactions. FICC would also
move the parenthetical describing that this is in connection with
FICC's presumption of match data pursuant to GSD Rule 10 to the end of
the sentence. These proposed changes would not be a change from FICC's
current process and are only clarifications, so FICC does not believe
this would impact the rights and obligations of Members.
24. Remove List of Designated Locked-In Trade Sources
    FICC proposes to remove the list of Designed Locked-In Trade
Sources in the GSD Rules, which currently lists (i) Federal Reserve
Banks, as fiscal agents of the United States; (ii) GCF-Authorized
Inter-Dealer Brokers (for GCF Repo Transactions); and (iii) The
Treasury Department. ``Locked-In Trade Source'' is currently defined in
GSD Rule 1 as a source of data on Locked-In Trades that FICC has so
designated, subject to such terms and conditions as to which the
Locked-In Trade Source and FICC may agree. As such, FICC believes that
the list of Designated Locked-In Trade Sources can be listed in a
separate document rather than the GSD Rules. This would provide FICC
with more flexibility to update the list of designated Locked-In Trade