[Federal Register Volume 77, Number 191 (Tuesday, October 2, 2012)]
[Notices]
[Page 60165]
[FR Doc No: 2012-24171]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67931; File No. SR-FICC-2012-06]

Self-Regulatory Organizations; Fixed Income Clearing Corporation;
Order Approving Proposed Rule Change to Move the Time at Which the
Mortgage-Backed Securities Division Runs Its Daily Morning Pass

September 26, 2012.

I. Introduction

    On August 6, 2012, the Fixed Income Clearing Corporation (``FICC'')
filed with the Securities and Exchange Commission (``Commission'')
proposed rule change SR-FICC-2012-06 pursuant to Section 19(b)(1) of
the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4
thereunder.\2\ The proposed rule change was published for comment in
the Federal Register on August 20, 2012.\3\ The Commission received no
comment letters regarding the proposal. For the reasons discussed
below, the Commission is granting approval of the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 67653 (August 14, 2012),
77 FR 50198 (August 20, 2012).
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II. Description

    FICC proposes to move the time at which its Mortgage-Backed
Securities Division (``MBSD'') runs its first processing pass of the
day from 2:00 p.m. to 4:00 p.m. Eastern Standard Time. The proposed
change does not require revisions to MBSD's rules because those rules
do not address the times of MBSD's processing passes.
    MBSD currently runs its first processing pass of the day
(historically referred to as the ``AM Pass'') at 2:00 p.m. Eastern
Standard Time. MBSD also executes an evening pass (referred to as the
``PM Pass'') at 8:00 p.m. Eastern Standard Time, which will remain
unchanged. On days when MBSD executes its to-be-announced netting
cycle, this cycle immediately follows the completion of the first pass
of the day. The proposed change to 4:00 p.m. for the first pass of the
day will allow more trades to be included in the to-be-announced net,
which will assist in reducing both the amount of fails in the market
and the related operational risk. The proposed change is being made at
the request of the Securities Industry and Financial Markets
Association (``SIFMA'') MBS Operations Committee. MBSD advised members
of the proposed change via an Important Notice dated August 1, 2012.

III. Discussion

    Section 19(b)(2)(C) of the Act \4\ directs the Commission to
approve a self-regulatory organization's proposed rule change if it
determines that the proposed rule change is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to such organization. Section 17A(b)(3)(F) of the Act \5\
requires, among other things, that the rules of a clearing agency be
designed to promote the prompt and accurate clearance and settlement of
security transactions, and to assure the safeguarding of securities and
funds that are in the custody or control of such clearing agency, or
for which it is responsible.
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    \4\ 15 U.S.C. 78s(b)(2)(C).
    \5\ 15 U.S.C. 78q-1(b)(3)(F).
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    The Commission concludes that the proposed rule change is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to FICC. The proposed rule change
will help to maximize the number of trades that are included in the to-
be-announced netting process. This, in turn, should reduce the number
of trades that ultimately fail, and will temper the attendant
operational risk, as well. The proposed change will therefore foster
the prompt and accurate clearance and settlement of security
transactions, and assure the safeguarding of securities and funds in
FICC's custody or control, or for which FICC is responsible.

IV. Conclusion

    On the basis of the foregoing, the Commission finds that the
proposal is consistent with the requirements of the Act, in particular
with the requirements of Section 17A of the Act \6\ and the rules and
regulations thereunder.
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    \6\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\7\ that the proposed rule change (File No. SR-FICC-2012-06) be and
hereby is APPROVED.\8\
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    \7\ 15 U.S.C. 78s(b)(2).
    \8\ In approving the proposed rule change, the Commission
considered the proposal's impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).

    For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-24171 Filed 10-1-12; 8:45 am]
BILLING CODE 8011-01-P