Fixed Income Clearing Corporation

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FICC will amend the Rules of its Government Securities Division ("GSD") and Mortgage Backed Securities Division ("MBSD") to classify as U.S. Members those Members of the GSD and MBSD that are U.S. Branches or agencies of non-U.S. Banks ("U.S. Branches"). GSD and MBSD Rules currently classify the membership of such U.S. Branches as "Foreign."

The classification of U.S. Branches as U.S. Members harmonizes FICC's Rules with the other clearing agency subsidiaries of The Depository Trust and Clearing Corporation, The Depository Trust Company ("DTC") and the National Securities Clearing Corporation ("NSCC").3

FICC also believes the rule change is appropriate because it reflects that U.S. Branches are regulated by a U.S. regulator or a state regulator. This means that the appropriate domestic regulator treats U.S. Branches as U.S. entities for most significant matters, and consequently an insolvency of such a member would be determined by applicable domestic "ring-fence" laws.4 Under the Rule changes, such members will be treated as domestic members for all purposes under FICC's Rules and Procedures unless FICC states otherwise in its Rules.5

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