Subject: File No. SR-FICC-2007-04
From: Susanne Trimbath, Ph.D.
Affiliation: STP Advisory Services, LLC

August 27, 2008

According to the subject release:
FICC proposes add a provision to both Divisions rules that would clarify FICC's right to deny membership to an applicant or member if FICC learns of any factor or circumstance that might impact the suitability of that particular applicant or member as a participant."

I recommend that one of these factors be the failure to deliver securities for settlement. This recommendation is consistent with the requirements of Section 17A of the Act. FICC is explicitly given the means to enforce this criteria:

"A registered clearing agency may summarily suspend and close the accounts of a participant who , (ii) is in default of any delivery of funds or securities to the clearing agency." Exchange Act, Section 17A.a.5.(C)

Data available from the Federal Reserve Bank of New York indicated fails to deliver and fails to receive were valued at $1.3 trillion in bonds on April 2, 2008. The only way to end this behavior is to remove the moral hazard established by continued tolerance for broker-dealers to satisfy themselves without bearing the full cost of failing to deliver securities at settlement to the detriment of others. Even if only $252 billion per day are allowed to fail, the loss of use of funds alone is costing investors over $7 billion per year.

Susanne Trimbath, Ph.D.