Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend GSD Rule 42 (Suspension of Rules) and MBSD Rule 33 (Suspension of Rules in Emergency Circumstances)

<NOTICE> SECURITIES AND EXCHANGE COMMISSION <DEPDOC>[Release No. 34-104091; File No. SR-FICC-2025-020]</DEPDOC> <SUBJECT>Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend GSD Rule 42 (Suspension of Rules) and MBSD Rule 33 (Suspension of Rules in Emergency Circumstances)</SUBJECT> <DATE>September 26, 2025.</DATE> Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)  <SU>1</SU> <FTREF/> and Rule 19b-4 thereunder, notice is hereby given that on September 25, 2025, 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  <SU>3</SU> <FTREF/> and Rule 19b-4(f)(6) thereunder. <SU>4</SU> <FTREF/> The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. <FTNT> <SU>1</SU>  15 U.S.C. 78s(b)(1). </FTNT> <FTNT> <SU>2</SU>  17 CFR 240.19b-4. </FTNT> <FTNT> <SU>3</SU>  15 U.S.C. 78s(b)(3)(A). </FTNT> <FTNT> <SU>4</SU>  17 CFR 240.19b-4(f)(6). </FTNT> <HD SOURCE="HD1">I. Clearing Agency's Statement of the Terms of Substance of the Proposed Rule Change</HD> The proposed rule change would amend Rule 42 (Suspension of Rules) of the GSD Rules. <SU>5</SU> <FTREF/> FICC's two affiliate clearing agencies, The Depository Trust Company (“DTC”) and National Securities Clearing Corporation (“NSCC,” and together with DTC and FICC, the “Clearing Agencies” or “Clearing Agency” when referring to one of any of the three Clearing Agencies)  <SU>6</SU> <FTREF/> will each file with the Commission substantively similar proposals to amend their corresponding rules: Rule 18 of the Rules, By-Laws, Organization Certificate of DTC (“DTC Rules”) and Rule 22 of the NSCC Rules & Procedures (“NSCC Rules”) (collectively with GSD Rule 42, the “Waiver Rules”). <SU>7</SU> <FTREF/> A substantially similar proposal to amend Rule 33 of the FICC Mortgage-Backed Securities Division (“MBSD”) Clearing Rules (“MBSD Rules”) was already filed with the Commission and implemented by FICC; however, some language was unintentionally omitted from the proposed changes in that Initial MBSD Filing, which this proposal would add. <SU>8</SU> <FTREF/> <FTNT> <SU>5</SU>  Capitalized terms not otherwise defined herein are defined in the FICC Government Securities Division Rulebook (“GSD Rules”), as applicable, <E T="03">available at http://www.dtcc.com/legal/rules-and-procedures.</E> </FTNT> <FTNT> <SU>6</SU>  The Clearing Agencies are each a subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC operates on a shared service model with respect to the Clearing Agencies. Most corporate functions are established and managed on an enterprise-wide basis pursuant to intercompany agreements under which it is generally DTCC that provides relevant services to the Clearing Agencies. </FTNT> <FTNT> <SU>7</SU>  Each Waiver Rule is publicly available in the respective rules of the applicable Clearing Agency at <E T="03">https://www.dtcc.com/legal/rules-and-procedures.</E> </FTNT> <FTNT> <SU>8</SU>   <E T="03">See</E> Securities Exchange Act Release No. 103584 (July 30, 2025), 90 FR 36492 (Aug. 4, 2025) (SR-FICC-2025-016) (“Initial MBSD Filing”). </FTNT> <HD SOURCE="HD1">II. Clearing Agency's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change</HD> 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. <HD SOURCE="HD2">(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change</HD> <HD SOURCE="HD3">1. Purpose</HD> The proposed rule change would amend Rule 42 (Suspension of Rules) of the GSD Rules. The Clearing Agencies will each file with the Commission substantively similar proposals to amend their corresponding Waiver Rules. A substantially similar proposal to amend MBSD Rule 33 was already filed with the Commission and implemented by FICC; however, some language was unintentionally omitted from the proposed changes in that Initial MBSD Filing, which this proposal would add. Specifically, the proposed amendments to GSD Rule 42 would (i) establish “reasonable and appropriate” as the new standard for when an extension, waiver or suspension may occur; (ii) require action under the rule to be in consideration of FICC's obligations as a clearing agency; and (iii) make technical, ministerial, and other conforming and clarifying changes. Additionally, the proposed changes would further amend MBSD Rule 33 to add language that covers the “procedures and regulations” of FICC in a paragraph describing the application of the rule's “reasonable and appropriate” standard. The language already existed in other sections of MBSD Rule 33 prior to the Initial MBSD Filing, but the Initial MBSD Filing unintentionally omitted the language from the referenced paragraph. <SU>9</SU> <FTREF/> As such, FICC now proposes to add the missing language, which would better harmonize the language in the referenced paragraph with the rest of MBSD Rule 33, as well as the other Clearing Agencies' Waiver Rules. <FTNT> <SU>9</SU>   <E T="03">See id.</E> </FTNT> <HD SOURCE="HD3">(i) Background</HD> GSD Rule 42 authorizes FICC, in general, to extend, waive, or suspend a GSD Rule, Procedure, or regulation issued by FICC. Under the current rule, any extension, waiver, or suspension must be (A) necessary or expedient and (B) requires a written report of such extension, waiver, or suspension (other than an extension of time of less than eight hours), stating the pertinent facts, the identity of the person or persons who authorized such extension, waiver or suspension and the reason such extension, waiver or suspension was deemed necessary or expedient. The report must then be promptly made and filed with FICC's records and available for inspection by any Member during regular business hours on Business Days. <HD SOURCE="HD3">(ii) Proposed Amendments to GSD Rule 42</HD> The proposed changes would harmonize the language, purpose, and governance of GSD Rule 42 with the equivalent Waiver Rule of MBSD Rule 33, <SU>10</SU> <FTREF/> and the similarly proposed changes to the Waiver Rules of DTC Rule 18  <SU>11</SU> <FTREF/> and NSCC Rule 22. <SU>12</SU> <FTREF/> Specifically, the proposed amendments to GSD Rule 42 would (i) establish “reasonable and appropriate” as the new standard for when an extension, waiver or suspension may occur; (ii) require action under the rule to be in consideration of FICC's obligations as a clearing agency; and (iii) make technical, ministerial, and other conforming and clarifying changes. <FTNT> <SU>10</SU>  MBSD Rules, <E T="03">available at https://www.dtcc.com/~/media/Files/Downloads/legal/rules/ficc_gov_rules.pdf.</E> </FTNT> <FTNT> <SU>11</SU>  DTC Rules, <E T="03">available at https://www.dtcc.com/~/media/Files/Downloads/legal/rules/dtc_rules.pdf.</E> </FTNT> <FTNT> <SU>12</SU>  NSCC Rules & Procedures (“NSCC Rules”), <E T="03">available at https://dtcc.com/~/media/Files/Downloads/legal/rules/nscc_rules.pdf.</E> </FTNT> GSD proposes to eliminate the requirement that an extension, waiver, or suspension authorized under GSD Rule 42 must be “necessary or expedient.” Instead, the proposed changes establish “reasonable and appropriate” as the applicable standard, which FICC believes is a clearer and more relevant standard for the actions to be taken under the rule. Moreover, FICC proposes to provide some general guidance as to when the rule may need to be invoked: to prevent, correct, mitigate or otherwise address an event or situation that, if left unaddressed, could result in a failure to satisfy a requirement of the GSD Rules, Procedures, or regulations issued by FICC. Similarly, the proposed rule change clarifies that such authority may not be used to circumvent FICC's regulatory obligations provided under GSD Rule 50 (Market Disruption and Force Majeure) in the event of a Market Disruption. In determining whether to exercise the authority provided by the proposed changes to GSD Rule 42, the proposed rule text would require FICC to consider its obligation to facilitate the prompt and accurate clearance and settlement of securities transactions; to safeguard securities and funds which are in its custody or control; and, in general, to protect investors and the public interest. Examples of the types of actions that may be considered reasonable and appropriate include, but are not limited to, extension of monthly bill payment that result from operational constraints; waiving certain charges as a result of unusual market activity; extension of funds-only settlement to capture mark-to-market pricing. Note, though, any extension, waiver or suspension under the proposed changes to GSD Rule 42 could not be a permanent action, nor would the rule permit extension, waiver or suspension of any regulatory obligations of FICC. The proposed rule change would also make technical, ministerial, and other conforming and clarifying changes, including updating the title of GSD Rule 42 to “Extension, Waiver or Suspension of Rules” and correct missing and defined terms. This proposed harmonization is important to help ensure that DTC, NSCC and both FICC division ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 19k characters. 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