[Federal Register Volume 60, Number 248 (Wednesday, December 27, 1995)]
[Notices]
[Pages 67003-67005]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-31309]
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[[Page 67004]]
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36605; International Series Release No. 904; File No.
SR-ISCC-95-5]
Self-Regulatory Organizations; International Securities Clearing
Corporation; Notice of Filing of Proposed Rule Change Relating to
Global Clearance Network Service
December 20, 1995.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on November 22, 1995, the
International Securities Clearing Corporation (``ISCC'') 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 primarily by ISCC. On November 29, 1995, and on November
30, 1995, ISCC filed amendments to its proposed rule change.\2\ The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
\1\ 15 U.S.C. 78s(b)(1) (1988).
\2\ Letters from Julie Beyers, Associate Counsel, ISCC, to
Christine Sibille, Division of Market Regulation, Commission
(November 28, 1995 and November 30, 1995).
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1. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The proposed rule change is to accommodate an additional service
provider in ISCC's Global Clearance Network (``GCN'') service.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, ISCC 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. ISCC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of such
statements.\3\
\3\ The Commission has modified parts of these statements.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
ISCC's Rule 50 provides that ISCC may establish a foreign
clearance, settlement, and custody service known as the Global
Clearance Network (``GCN'') in conjunction with banks, trust companies,
and other entities. Presently, ISCC has established GCN relationships
with Citibank, N.A., Standard Bank of South Africa, Westpac Custodian
Nominees Limited of Australia, and Westpac Nominees-NZ-Limited.\4\ The
proposed rule change will accommodate S.D. INDEVAL, S.A. de C.V.
(``INDEVAL'') as an additional GCN service provider.
\4\ Securities Exchange Act Release Nos. 29841 (October 18,
1991), 56 FR 55960; 35392 (February 16, 1995), 60 FR 10415; and
36339 (October 5, 1995), 60 FR 53447.
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ISCC in conjunction with the International Operations Association
(``IOA) \5\ has developed a cross-border communications link to INDEVAL
using the telecommunication system provided by the Society for
Worldwide Interbank Financial Telecommunications S.C. (``SWIFT'').
INDEVAL was created under Mexican securities law in 1978 and has been
privately owned since 1987.\6\ INDEVAL is regulated by the Government
of Mexico. INDEVAL provides clearance, settlement, and custodial
services for all transactions executed on the Mexican Stock Exchange
and for transactions in other securities that are publicly traded in
Mexico. INDEVAL accepts any security publicly offered in Mexico for
custody and clearing except for certain Mexican government
securities.\7\ As of December 31, 1994, 415 institutions were
registered with INDEVAL, and the value of assets under custody was
744.2 billion Mexican pesos. INDEVAL may act as an eligible foreign
custodian under Rule 17f-5 under the Investment Company Act of 1940.\8\
\5\ IOA was established in 1980 to promote and facilitate the
development of cross-border investment activities. IOA is a division
of the Securities Industry Association and has membership of
approximately 800 internationally active broker-dealers, banks,
custodians, clearing organizations, and other service providers.
\6\ Its shareholders are brokerage houses, banks, insurance
companies, Banco de Mexico (the central bank of Mexico), and the
Mexican Stock Exchange.
\7\ Starting in April 1994, Banco de Mexico authorized INDEVAL
to offer custodial and transfer services for government debt
securities to foreign direct account depositors by means of a link
between Banco de Mexico and INDEVAL.
\8\ Letter from Richard F. Jackson, Division of Investment
Management, Commission, File No. 132-3 (October 19, 1990). An
``eligible foreign custodian'' includes a securities depository or
clearing agency which is incorporated or organized under the laws of
a country other than the United States and which operates the
central system for handling of securities or equivalent book-entries
in that country. 17 CFR 270.17f-5(c)(2)(iii) (1994).
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INDEVAL has entered into an agreement with ISCC pursuant to which
INDEVAL has agreed to provide access to its clearance, settlement, and
custody services to GCN participants that qualify to be customers of
INDEVAL.\9\ The link permits ISCC members that also are members of
INDEVAL to send instructions through ISCC to INDEVAL regarding such
participants' INDEVAL accounts. The link does not provide a mechanism
for transferring securities or funds into or out of the United States.
INDEVAL is providing the services at its scheduled rates and is
responsible for collecting fees directly from the participants. The
agreement is terminable on ninety days prior notice. However, if ISCC
notifies INDEVAL within such ninety day period that it has not been
able to make arrangements with an alternative service provider, the
agreement terminates thirty days after the expiration of such ninety
day period.
\9\ Such agreement is governed by the laws of the United Mexican
States.
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The proposed rule change will facilitate and centralize the
processing of international transactions at a beneficial cost to
members which ultimately will be reflected in services to the investing
public. Accordingly, these changes are consistent with the requirements
of Section 17A of the Act and the rules and regulations thereunder.
(B) Self-Regulatory Organization's Statement on Burden on Competition
ISCC does not believe that the proposed rule change will have an
impact on or impose a burden on competition.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received from Members, Participants, or Others
No written comments relating to the proposed rule change have been
solicited or received. ISCC will notify the Commission of any written
comments received by ISCC.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within thirty-five days of the date of publication of this notice
in the Federal Register or within such longer period (i) as the
Commission may designate up to ninety days of such date if it finds
such longer period to be appropriate and published its reason for so
finding or (ii) as to which the self-regulatory organization consents,
the Commission will:
(A) By order approve such proposed rule change or
(B) Institute proceedings to determine whether the proposed rule
change should be approved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing.
[[Page 67005]]
Persons making written submissions should file six copies thereof with
the Secretary, Securities and Exchange Commission, 450 Fifth Street NW,
Washington, DC 20549. Copies of the submission, all subsequent
amendments, all written statements with respect to the proposed rule
change that are filed with the Commission, and all written
communications relating to the proposed rule change between the
Commission and any person, other than those that may be withheld from
the public in accordance with provisions of 5 U.S.C. 552, will be
available for inspection and copying in the Commission's Public
Reference Section, 450 Fifth Street NW, Washington, DC 20549. Copies of
such filing will also be available for inspection and copying at the
principal office of the above-mentioned self-regulatory organization.
All submissions should refer to the file number SR-ISCC-95-05 and
should be submitted by January 17, 1995.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-31309 Filed 12-26-95; 8:45 am]
BILLING CODE 8010-01-M
