[Federal Register Volume 64, Number 222 (Thursday, November 18, 1999)]
[Notices]
[Pages 63097-63098]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-30087]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-42127; File No. SR-EMCC-99-10]
Self-Regulatory Organizations; Emerging Markets Clearing
Corporation; Order Granting Accelerated Approval of a Proposed Rule
Change Relating to the Requirements for a Class I, II, or III Director
November 10, 1999.
On September 24, 1999, the Emerging Markets Clearing Corporation
(``EMCC'') filed with the Securities and Exchange Commission
(``Commission'') a proposed rule change (File No. SR-EMCC-99-10)
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'').\1\ Notice of the proposal was published in the Federal
Register on October 22, 1999.\2\ No comment letters were received. For
the reasons discussed below, the Commission is granting accelerated
approval of the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ Securities Exchange Act Release No. 42016 (October 15,
1999), 64 FR 57169.
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I. Description
The rule change amends Article II, Section 2.2 of EMCC's by-laws to
postpone until the year 2000 annual shareholders meeting the
requirement that individuals elected to Class I, II, or III
directorships must be an officer or partner of a shareholder or of an
affiliate or subsidiary of a shareholder. Similarly, the rule change
amends Section 1(A) of EMCC's amended and restated shareholder
agreement to postpone until the year 2000 annual shareholders meeting
the requirement that directors elected to these classes must be an
officer or partner of a ``participant shareholder'' (i.e., a
shareholder that is also an EMCC participant) or of an affiliate of a
participant shareholder. EMCC's previous rules would have implemented
these provisions at the 1999 annual shareholders meeting.\3\
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\3\ These amendments will allow EMCC to maintain the status quo
with respect to the eligibility requirements for directors. For a
description of EMCC's current rules and procedures governing EMCC's
board of directors, see Securities Exchange Act Release No. 39661,
International Series Release No. 1117 (February 13, 1998), 63 FR
8711.
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The rule change also amends the amended and restated shareholders
agreement's definition of ``participant shareholder'' to mean a
shareholder that holds one or more Class A Subject shares and is also a
participant or an affiliate of a participant. Previously, a
``participant shareholder'' was defined as a shareholder that holds one
or more Class A Subject shares.
II. Discussion
Section 17A(b)(3)(C) of the Act \4\ requires that the rules of a
clearing agency assure fair representation of its shareholders in the
selection and administration of its affairs. For the reasons set forth
below, the Commission believes that EMCC's rule change is consistent
with its obligations under the Act.
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\4\ 15 U.S.C. 78q-1(b)(3)(C).
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EMCC's membership is not yet as large as its management had
anticipated it would be at this time, and there are a number or
shareholders and other
[[Page 63098]]
industry participants who have not yet completed the membership process
or have not yet acquired EMCC shares. The Commission believes that it
is important for EMCC to maintain the current broad-based
representation of industry participants on its board of directors while
it continues to expand its participants base. If EMCC were to restrict
its board membership to officers or partners of shareholders or of
affiliates or subsidiaries of shareholders, EMCC could possibly have to
replace current board members with representatives from shareholders
already represented on the board. The rule change allows EMCC to
maintain its current board membership, comprised of participants,
shareholders, and founding contributors, which provides for a broad
cross-section of the emerging markets community while providing EMCC
with an additional year to continue to broaden its participant base.
When EMCC was originally organized, it was expected than an entity
that became a shareholder would also be the participant. However, EMCC
participants have indicated that they may prefer that the shareholder
and the participant be affiliated but different entities. The
Commission believes that amending the definition of ``participant
shareholder'' to include an affiliate of a participant will provide
EMCC's participants with additional flexibility without adversely
affecting EMCC's operations or its participants' ability to be
represented on the EMCC Board.
EMCC has requested that the Commission find good cause for
approving the proposed rule change prior to the thirtieth day after the
date of publication of notice of the filing. The Commission finds good
cause for so approving the proposed rule change prior to the thirtieth
day after the date of publication of notice of the filing because
accelerated approval will allow the amendments to take effect in time
for EMCC's 1999 shareholders meeting. Furthermore, the Commission has
not received any comment letters and does not expect to receive any
comment letters on the proposal.
III. Conclusion
On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act and
in particular Section 17A of the Act and the rules and regulations
thereunder.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-EMCC-99-10) be and hereby is
approved on an accelerated basis.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\5\
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\5\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-30087 Filed 11-17-99; 8:45 am]
BILLING CODE 8010-01-M
