[Federal Register Volume 62, Number 248 (Monday, December 29, 1997)]
[Notices]
[Pages 67672-67673]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33716]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39448; File No. SR-MBSCC-97-6]
Self-Regulatory Organizations; MBS Clearing Corporation; Notice
of Filing and Order Granting Accelerated Approval of Proposed Rule
Change Relating to Trade Restrictions Between Accounts and Transfer of
Trades
December 15, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on September 15, 1997, MBS
Clearing Corporation (``MBSCC'') filed with the Securities and Exchange
Commission (``Commission'') and on September 24, 1997, amended the
proposed rule change (File No. SR-MBSCC-97-6) as described in Items I
and II below, which items have been prepared primarily by MBSCC. The
Commission is publishing this notice and order to solicit comments from
interested persons and to grant accelerated approval on the proposed
rule change.
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\1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change will amend MBSCC's rules to incorporate
previously approved procedures regarding trade restrictions between
accounts and transfer of trades.
[[Page 67673]]
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, MBSCC 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. MBSCC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of such
statements.\2\
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\2\ The Commission has modified the text of the summaries
prepared by MBSCC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
MBSCC publishes a manual known as the Clearing Source Book
(``Source Book''). The Source Book is designed to be a self-
instructional tool for MBSCC participants that offers guidance about
MBSCC services, procedures, forms, schedules, and regulations. It is
referred to in the rules of MBSCC as the ``Procedures.''
In 1996, the Commission approved a proposed rule change to the
Source Book relating to trade restrictions between accounts.\3\ Upon
subsequent review, MBSCC realized it inadvertently omitted this Source
Book section from the rules of MBSCC. The proposed rule change will add
a new Article II, Section 3 to MBSCC's rules to restrict participants
with multiple accounts from submitting to the settlement balance order
(``SBO'') system trades between those accounts as well as between a
participant's account and the account of a related participant. The SBO
settlement netting process was not intended for such trades, and the
implementation of these trading restrictions is designed to help
prevent MBSCC's clearance and settlement process from being
inappropriately influenced. However, MBSCC will waive the restrictions
upon a showing by a participant that its trades will not be effected
for an improper purpose. In all instance, participants may record these
trades on a trade-for-trade basis.
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\3\ Securities and Exchange Act Release No. 37205 (May 13,
1996), 61 FR 24989 (File No. SR-MBSCC-95-8).
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To provide participants with operational and administrative
flexibility, the Source book provides that, subject to contraside
approval, MBSCC participants may transfer trades from one account to
another or may change the type of trades recorded within a specific
account under specified circumstances.\4\ The proposed rule change will
add Article II, Section 4, to MBSCC's rules to mirror this provision.
Where participants are parties to an acquisition, merger, or
reorganization, this process assists participants when they must assume
obligations or transfer trades. It also aids participants generally in
facilitating transfers through a uniform and streamlined process as
compared to a multistep cancellation and rebooking procedure.
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\4\ Since its inclusion in the October 1992 edition of the
Source Book, the transfer of trade process has been an unchanged
component of MBSCC's procedures. Source book Chapter III, Account
Structure.
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MBSCC believes that the proposed rule change is consistent with the
requirements of Section 17A of the Act \5\ and the rules and
regulations thereunder because it clarifies the rules of MBSCC relating
to trade restrictions between accounts and transfer of trades and
thereby should facilitate the prompt and accurate clearance and
settlement of securities transactions.
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\5\ 15 U.S.C. 78q-1.
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(B) Self-Regulatory Organization's Statement on Burden on Competition
MBSCC does not believe that the proposed rule change will impose
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received from Members, Participants or Others
No comments on the proposed rule change were solicited or received.
MBSCC will notify the Commission of any written comments it receives.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Section 17A(b)(3)(F) of the Act requires that the rules of a
clearing agency be designed to foster cooperation and coordination with
persons engaged in the clearance and settlement of securities
transactions. The proposed rule facilitates a uniform and streamlined
process by clarifying the rules of MBSCC relating to trade restrictions
and transfer of trades and thus should foster cooperation and
coordination with persons engaged in the clearance and settlement of
securities transactions.
The Commission finds good cause for approving the proposed rule
change prior to the thirtieth day after the date of publication of
notice thereof in the Federal Register because the procedures
incorporated in the proposed rule change were previously approved by
the Commission, they have no substantive effect on participants, and
they eliminate inconsistencies between MBSCC's rules and Source Book.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 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 the provisions
of 5 U.S.C. Sec. 552, will be available for inspection and copying in
the Commission's Public Reference Section, 450 Fifth street, N.W.,
Washington, D.C. 20549. Copies of such filing also will be available
for inspection and copying at the principal office of MBSCC. All
submissions should refer to File No. SR-MBSCC-97-6 and should be
submitted by January 20, 1998.
V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-MBSCC-97-6) be and hereby is
approved on an accelerated basis.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-33716 Filed 12-24-97; 8:45 am]
BILLING CODE 8010-01-M
